PYPL

PayPal Holdings, Inc.

85.21
USD
5.96%
85.21
USD
5.96%
71.83 310.16
52 weeks
52 weeks

Mkt Cap 100.12B

Shares Out 1.18B

Chat
Send me real-time posts from this site at my email

Why PayPal Popped Today

What happened PayPal stock (NASDAQ: PYPL) popped in Wednesday trading after two separate analysts lowered their price targets on the stock...at the same time as both analysts insisted that the fintech giant is undervalued at today's prices. As of 12:50 p.m. ET, PayPal stock is up 3.5%. So what In twin reports, tiny San Francisco broker BTIG and then gigantic megacorp Citigroup cut their price targets on PayPal shares steeply, to $270 and $235 a share, respectively. We don't know exactly what Citi's concerns were, but in a note out this morning, TheFly.com relayed a few details of BTIG's report, highlighting "the decline in equity multiples that has occurred in recent weeks among growth stocks." As BTIG explained, higher interest rates and other so-called headwinds appear to be to blame for investors shying away from growth stocks. Now what That being said, BTIG argued that while the reduction in earnings multiples has some basis, the sell-off in PayPal's case has become "excessive." And yes, over the last six months, shares of the fintech giant have sold off by some 47% -- getting almost literally cut in half as investors fled growth in favor of value. But does that necessarily mean PayPal stock is undervalued today? Does it mean PayPal stock is due to shoot up 43% this year (as Citigroup says) -- or even 65% (as BTIG predicts)? I don't think so. Consider: With $5 billion in free cash flow, or FCF (and nearly as much GAAP profit), PayPal stock currently sells for 37 times FCF and 38 times earnings. Maybe you could argue that with an 18% projected long-term earnings growth rate, those valuations are reasonable. They're certainly not cheap, however, and I don't agree that PayPal is guaranteed to return to anywhere near the prices its shares fetched six months ago. For that reason, I'm going to have to disagree with Citi and BTIG on this one. At best, PayPal shares might be fairly priced after their recent sell-off, but I personally believe they have much fUrther to fall before reaching bargain territory. 10 stocks we like better than PayPal Holdings When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and PayPal Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of January 10, 2022 Citigroup is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends PayPal Holdings. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue