PayPal (NASDAQ:PYPL) Shares Gap Down – Should You Sell?

PayPal Holdings, Inc. (NASDAQ:PYPL) shares gapped down prior to trading on Friday . The stock had previously closed at $61.47, but opened at $53.74. PayPal shares last traded at $54.46, with a volume of 12,366,635 shares trading hands.

PayPal News Roundup

Here are the key news stories impacting PayPal this week:

• Positive Sentiment: With the reported bid no longer progressing, PayPal can focus on executing its standalone turnaround strategy. Some investors argue the board’s earlier rejection of an offer near $60.50 per share preserved potentially greater long-term value for shareholders. PayPal Drops 12% Overnight on Dead Stripe Deal
• Positive Sentiment: Recent operating results provide some support for the standalone case: PayPal exceeded second-quarter earnings and revenue expectations, while revenue increased approximately 4.8% year over year. New integrations enabling PayPal and Venmo tuition payments through campus-payment platforms could provide an additional growth avenue. PayPal Tuition Payment Push
• Neutral Sentiment: The reported decision appears to be a name-specific catalyst rather than a broad financial-sector move. Market attention is also focused on Federal Reserve Chair Kevin Warsh’s Jackson Hole speech, which could influence interest-rate expectations across the market. Five Things to Know Before the Market Opens
• Negative Sentiment: The collapse of the reported roughly $50 billion-$53 billion buyout removes the premium investors had anticipated and leaves PayPal responsible for proving its turnaround without an acquirer. Reports said the consortium walked away after negotiations over valuation and deal terms, prompting a sharp reversal in PYPL shares. PayPal Shares Fall After Takeover Pursuit Is Abandoned
• Negative Sentiment: Investors must now place greater weight on PayPal’s moderate revenue growth, competitive pressures and execution under its standalone leadership, rather than the possibility of a near-term acquisition payout. PayPal Takeover Bid Reportedly Ends

Analysts Set New Price Targets

PYPL has been the subject of several research analyst reports. Needham & Company LLC reiterated a “hold” rating on shares of PayPal in a research note on Tuesday, May 5th. Truist Financial increased their price target on PayPal from $59.00 to $62.00 and gave the company a “hold” rating in a research note on Wednesday, August 19th. Clear Str raised PayPal to a “hold” rating in a report on Thursday, July 16th. UBS Group set a $45.00 price objective on shares of PayPal in a research report on Wednesday, July 29th. Finally, TD Cowen upped their price objective on shares of PayPal from $48.00 to $59.00 and gave the company a “hold” rating in a report on Wednesday, July 29th. Nine investment analysts have rated the stock with a Buy rating, thirty-four have given a Hold rating and four have given a Sell rating to the company. According to data from MarketBeat.com, PayPal currently has an average rating of “Hold” and an average price target of $56.14.

PayPal Stock Performance

The company has a market cap of $46.52 billion, a P/E ratio of 10.28, a price-to-earnings-growth ratio of 1.51 and a beta of 1.30. The company has a quick ratio of 1.29, a current ratio of 1.29 and a debt-to-equity ratio of 0.55. The stock has a 50 day moving average price of $53.66 and a two-hundred day moving average price of $48.07.

PayPal (NASDAQ:PYPL) last released its quarterly earnings results on Tuesday, July 28th. The credit services provider reported $1.38 earnings per share for the quarter, topping the consensus estimate of $1.28 by $0.10. PayPal had a return on equity of 24.39% and a net margin of 14.36%.The business had revenue of $8.68 billion during the quarter, compared to analysts’ expectations of $8.47 billion. During the same period last year, the firm posted $1.40 EPS. The firm’s revenue for the quarter was up 4.8% compared to the same quarter last year. On average, research analysts predict that PayPal Holdings, Inc. will post 5.38 earnings per share for the current fiscal year.

PayPal Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Friday, September 25th. Investors of record on Friday, September 4th will be paid a $0.14 dividend. The ex-dividend date is Friday, September 4th. This represents a $0.56 annualized dividend and a dividend yield of 1.0%. PayPal’s dividend payout ratio is 10.59%.

Insider Buying and Selling

In related news, insider Frank Keller sold 4,612 shares of the firm’s stock in a transaction dated Wednesday, June 3rd. The shares were sold at an average price of $42.54, for a total transaction of $196,194.48. Following the transaction, the insider directly owned 41,567 shares of the company’s stock, valued at approximately $1,768,260.18. This trade represents a 9.99% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CAO Chris Natali sold 1,337 shares of PayPal stock in a transaction dated Wednesday, July 29th. The stock was sold at an average price of $58.10, for a total transaction of $77,679.70. Following the completion of the sale, the chief accounting officer owned 2,216 shares of the company’s stock, valued at $128,749.60. This trade represents a 37.63% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 14,774 shares of company stock valued at $738,249. 0.63% of the stock is owned by company insiders.

Institutional Investors Weigh In On PayPal

A number of hedge funds and other institutional investors have recently made changes to their positions in PYPL. BlackRock Inc. bought a new position in PayPal during the 2nd quarter worth $3,236,989,000. California State Teachers Retirement System grew its holdings in shares of PayPal by 4,036.2% during the 2nd quarter. California State Teachers Retirement System now owns 55,904,110 shares of the credit services provider’s stock worth $2,413,939,000 after purchasing an additional 54,552,522 shares in the last quarter. Bank of America Corp DE acquired a new stake in shares of PayPal during the 2nd quarter worth $975,563,000. Norges Bank bought a new position in shares of PayPal in the fourth quarter worth $949,758,000. Finally, Primecap Management Co. CA bought a new position in shares of PayPal in the second quarter worth $422,092,000. 68.32% of the stock is currently owned by institutional investors and hedge funds.

PayPal Company Profile

PayPal Holdings, Inc operates a global digital payments platform that enables consumers and merchants to send and receive payments online, on mobile devices and at the point of sale. The company provides a broad set of payment solutions, including a digital wallet, merchant payment processing, checkout services, invoicing and fraud-management tools. PayPal’s platform is designed to support e-commerce, in-person retail and person-to-person transfers, targeting both individual consumers and businesses of varying sizes.

Key products and services in PayPal’s portfolio include the PayPal wallet and checkout ecosystem, the Venmo peer-to-peer mobile app, Braintree’s developer-focused payment gateway, Xoom for international money transfers, and PayPal Credit and buy-now-pay-later options.