PYPL (PayPal Holdings Inc) fundamental and technical analysis
Introduction:
Hello everyone! Today I’m going to be talking about PayPal, a company that just allowed its customers to buy and sell crypto currency on its service. Good news! However, I do see a bearish chart pattern on this stock, and one that PYPL is struggling to break through. That paired with a high PE ratio (even for PayPal) and a large unfilled gap near the bottom of PYPL’s rally, I can’t help but be bearish. That being said, you could be confused why I’m going to long this stock. Read on to find out.
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Technical analysis section:
PayPal has been forming a triple top for quite a while now, and whether or not it breaks the resistance is important. Most likely, it won’t, however, from a technical analysis viewpoint. As I’ve said in the intro, there is a pretty large unfilled gap all the way down at 131$, that just so happens to be where our triple top target would be. A correction down to 131$ would fill the gap and reach our triple top target, so that’s what I think will happen. Entry is 131.14, target 1 the triple top support, target 2 is the triple top resistance, and the stop-loss is anything you want below the historical resistance of roughly 123$.
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Fundamental analysis section:
For me to even look at PayPal, let alone make a post on it, it had to meet some “growth stock”criteria. They are: a rising eps for the past 5 years, rising sales for the past 5 years, a positive net income, debt to equity ratio under 1, current ratio above 1, and a positive price to earnings ratio. That makes this company a healthy growth stock (by my criteria), but there is one problem. PYPL has had a high P/E ratio for a while, but now it’s at 80, which is high even for PayPal. That makes this company potentially overvalued, and would be much more attractive at a lower price to earnings ratio.
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Final thoughts:
PayPal is a good company, and a good stock, but it may be overvalued and ready for a correction. Since I don’t short stocks, I didn’t make this a short trade, but you could short it down to the gap and then long it until it reaches the targets on the chart. Will update this idea and say whether or not PayPal broke through the triple top resistance. There are links to some other ideas I made down below on stocks with amazing growth potential, as well as an educational post about “value investing”. Good luck and great trading!
Hello everyone! Today I’m going to be talking about PayPal, a company that just allowed its customers to buy and sell crypto currency on its service. Good news! However, I do see a bearish chart pattern on this stock, and one that PYPL is struggling to break through. That paired with a high PE ratio (even for PayPal) and a large unfilled gap near the bottom of PYPL’s rally, I can’t help but be bearish. That being said, you could be confused why I’m going to long this stock. Read on to find out.
——————————————————————————————————————————————————————————————
Technical analysis section:
PayPal has been forming a triple top for quite a while now, and whether or not it breaks the resistance is important. Most likely, it won’t, however, from a technical analysis viewpoint. As I’ve said in the intro, there is a pretty large unfilled gap all the way down at 131$, that just so happens to be where our triple top target would be. A correction down to 131$ would fill the gap and reach our triple top target, so that’s what I think will happen. Entry is 131.14, target 1 the triple top support, target 2 is the triple top resistance, and the stop-loss is anything you want below the historical resistance of roughly 123$.
——————————————————————————————————————————————————————————————
Fundamental analysis section:
For me to even look at PayPal, let alone make a post on it, it had to meet some “growth stock”criteria. They are: a rising eps for the past 5 years, rising sales for the past 5 years, a positive net income, debt to equity ratio under 1, current ratio above 1, and a positive price to earnings ratio. That makes this company a healthy growth stock (by my criteria), but there is one problem. PYPL has had a high P/E ratio for a while, but now it’s at 80, which is high even for PayPal. That makes this company potentially overvalued, and would be much more attractive at a lower price to earnings ratio.
——————————————————————————————————————————————————————————————
Final thoughts:
PayPal is a good company, and a good stock, but it may be overvalued and ready for a correction. Since I don’t short stocks, I didn’t make this a short trade, but you could short it down to the gap and then long it until it reaches the targets on the chart. Will update this idea and say whether or not PayPal broke through the triple top resistance. There are links to some other ideas I made down below on stocks with amazing growth potential, as well as an educational post about “value investing”. Good luck and great trading!
