Should you buy or sell PayPal shares as cryptos trim gains?

on Jul 27, 2021
  • PayPal shares pulled back 3% on Tuesday to nearly wipe all of last week’s gains.
  • The global payments giant reports fiscal second-quarter results on Wednesday.
  • PayPal launched crypto payments last year and added more features this year.

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PayPal Holdings Inc. (NASDAQ:PYPL) shares lost 3% on Tuesday to trim last week’s gains. The stock fell towards $297 per share in the afternoon session after opening slightly above $305. The online payments giant reports fiscal Q2 results on Wednesday after markets close, creating a perfect opportunity to buy the pullback.

PayPal launched crypto payments last year and has since added more features to capitalize on one of the most disruptive innovations. 

The company’s stock price soared more than 4% last week but has since wiped out nearly all the gains after crypto prices pulled back Tuesday to take a breather.

However, the pullback could be a perfect opportunity to buy PYPL shares ahead of the company’s earnings on Wednesday and an inevitable rebound in cryptocurrency prices.

Should you invest in PayPal stock now?

From a valuation perspective, PayPal shares seem steeply valued at a P/E ratio of 69.90. Moreover, the forward P/E of 51.98 is also high, making the stock less attractive to value investors. However, analysts expect PayPal to report earning per share growth of 71% this year before growing at an average annual rate of about 24.40% over the next five years.

Therefore, PayPal could attract growth investors especially given its investment in the cryptocurrency market. 

The younger generation is highly inclined towards alternative investing methods, including crypto and PYPL, by tapping into the crypto opportunity stands to benefit.

The stock price could also benefit in the short term from the upcoming earnings report, triggering a significant rebound from Tuesday’s pullback.

Source – TradingView

Technical overview: PayPal stock price forecast for Q3 2021

Technically, PayPal’s stock appears to have recently pulled back to retest the trendline support. The pullback pushed PYPL shares off overbought conditions in the 14-day RSI, but there is still room to run before reaching oversold conditions.

Therefore, investors can target potential rebounds at approximately $309.87. The support levels are $286.50 and $274.81.

Bottom line: the catalyst for buying PayPal shares now

Although PayPal shares appear steeply valued based on P/E ratios, the stock could bounce back on Wednesday’s after earnings report following Tuesday’s sharp pullback.

The company’s long-term growth looks exciting amid its investment in cryptocurrencies. Therefore, it may be best to buy PYPL shares now before a potential post-earnings rebound kicks in.