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PayPal stock price forecast: Have PYPL shares bottomed?

PayPal stock price forecast: Have PYPL shares bottomed?

Last updated 29th Jun 2022
Disclosure
  • PayPal stock price has crawled back in the past few days.
  • The recovery has mirrored that of the S&P 500 and other tech stocks.
  • We explain whether the shares have bottomed and what to expect.

The PayPal stock price has cautiously risen in the past few weeks as investors go bargain-hunting on the fintech giant. Its shares are trading at $116, which is about 26% above the highest level this year. Its market cap has bounced back to about $135 billion, which is substantially lower than its all-time high of over $300 billion.

Is PYPL stock undervalued?

PayPal is one of the leading fintech companies globally. The firm offers all types of services to both businesses consumers. For example, its eponymous service allows people to send money to each other globally. It also helps companies receive money from customers.

PayPal also owns Venmo, the well-known peer-to-peer money transfer company. Further, PayPal owns Honey, a company that crawls the internet for discounts in websites like eBay and Amazon.

Most importantly, the company has moved into the cryptocurrency industry. Today, it is possible to buy Bitcoin using PayPal directly from its wallet. The company has over 426 million customers globally, making it one of the biggest firms in the world.

The firm has been in a strong growth path as its revenue has jumped from $13 billion in 2017 to over $25 billion in 2021. Its profitability has also moved from $1.75 billion to over $4.5 billion.

Therefore, the PayPal stock price has been in a strong bearish trend in the past few months as investors price in a slower growth of its business. The decline has also mirrored the performance of other fintech giants like Affirm and Block, formerly known as Square. The sell-off gained steam last year as the firm attempted to buy Pinterest.

Still, the company has become highly undervalued. It is trading at a trailing twelve-month PE ratio of 33, which is lower than its historical average. Its forward PE ratio has moved to 37, signalling that the firm is undervalued. Therefore, the next key catalyst for the PayPal share price will be the upcoming earnings.

PayPal stock price forecast

The daily chart shows that the PYPL share price has crawled back in the past few days. Despite this recovery, the stock remains below its 50-day moving average and the 23.6% Fibonacci retracement level. Its MACD has moved slightly above the neutral level while the Relative Strength Index (RSI) has also pointed upwards.

Therefore, while the PayPal share price remains under pressure, there is a likelihood that it has bottomed. If this happens, the next key resistance level to watch will be the 23.6% retracement point at $143.

Crispus Nyaga

Crispus Nyaga

Crispus is a financial analyst with over 9 years in the industry. He covers cryptocurrencies, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.