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PayPal's stock price has reached a six-year low due to a significant stake disposal, but the company's increasing payment volume and user engagement suggest potential for future revenue growth, leading analysts to maintain a predominantly bullish outlook despite short-term downside risks; therefore, long-term investors may consider buying the stock while short-term traders should hold until signs of a bullish reversal appear (analysis conducted on an unspecified date).
Fundamental Analysis: PayPal Holdings, Inc. (PYPL)
PayPal Holdings, Inc. had seen deterioration in its share price, reaching a six-year low due to a hedge fund's disposal of a $2 billion stake. This considerable sale has added to the downward pressure on the stock, which has already been trading near its 52-week low at $57.29.
On a more positive note, PayPal continues to manage more payment volume, and current users are becoming increasingly active. This factor might help stabilize and increase future revenues, which could potentially bring the stock price back up. The company appears to be well-positioned amidst market turmoil outbreaks related to cryptocurrencies, as the stock is highlighted among others as one to keep an eye on in this context.
Meanwhile, the company's earnings per share (EPS) has been reported to be $2.32. Based on a price-earnings (PE) ratio of 25.61, this suggests that the market has reasonable expectations about PayPal's future earnings growth.
The market capitalization of the company is around $66.29 billion with 1.12 billion shares outstanding. The company's volume of 18.33 million is slightly above their average volume of 17.95 million, indicating increased investor activity and interest in the company.
Technical Analysis: PayPal Holdings, Inc. (PYPL)
As per the technical indicators, the stock is currently trading at $59.42, a tad bit above its established support level of $59.37. The relative strength index (RSI) stands at 19, indicating that the stock is currently in the oversold territory. This might hint at potential upward price correction in the short term.
The most recent moving average data presents a bearish outlook. The stock is trading well below both its 50-day average ($67.69) and 200-day average ($72.89), signifying a downward trend. Additionally, the negative 3-month Moving Average Convergence Divergence (MACD) of -3.23 further supports the bearish sentiment.
Predictions: PayPal Holdings, Inc. (PayPal)
The discounted cash flow (DCF) valuation suggests a fair value of $66.13, which is considerably above the current price, implying the stock might be undervalued. However, taking into consideration the downward pressure from the negative market sentiment and technical factors, the price might not immediately rebound to this level.
In terms of analyst ratings, there are 22 'buy' recommendations, 9 'hold' and no 'sell' recommendations. The analyst target prices range from a low of $72 to a high of $290, with a median target of $120 and a consensus of $128.21. This wide range implies considerable uncertainty, but overall leans towards a positive outlook for the stock performance in future timeframes.
Final Evaluation: PayPal Holdings, Inc. (PYPL)
Despite the current headwinds, analysts remain predominantly bullish about PayPal's future, with the consensus leaning towards 'Buy'. The fact that the company continues to handle increasing payment volume and user engagement signals the potential for revenue growth and could help improve market sentiment associated with the stock.
However, investors must also consider the technical indicators are currently pointing to a bearish trend and the stock is trading near its 52-week low. There's still a clear short-term downside risk involved.
Given that the stock appears to be currently undervalued based on the DCF analysis and the predominance of 'Buy' ratings among analysts, PayPal could be seen as a 'Buy' for long-term oriented investors who can tolerate potential short-term volatility.
However, for short-term traders, due to the strong bearish market sentiment and technical indicators, it might be wise to 'Hold' until the market shows signs of bullish reversal.
