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PayPal Holdings, Inc. - A Great Entry Point Thanks To Analyst Downgrades & Tax Loss Selling

Jan. 05, 2022 1:14 PM ETPayPal Holdings, Inc. (PYPL)METV26 Comments
Anthony Cataldo profile picture
Anthony Cataldo


  • PayPal suffered a significant price-per-share decline, and a gap down, after numerous analysts downgraded the stock on November 9, 2021.
  • These downgrades coincided with tax loss selling or tax loss harvesting season, beating the stock up more than one might expect.
  • Downside over-reactions create buying opportunities – the tide is already turning, as at least one analyst made specific reference to this seasonal pattern with an upgrade.
  • I recommend that you note the very low short interest [<2%] – a positive indicator with respect to market sentiment, buy on dips and hold and accumulate PayPal shares.
  • I expect a favorable January effect for PayPal, followed by a long-term improvement, as this metaverse stock recovers in 2022.

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An Analyst Upgrade and the Underlying Rationale for Entry

The statement below explains the increase in the stock price-per-share (PPS) for PayPal Holdings, Inc. (NASDAQ:PYPL) on the first trading day of the year - January 3, 2022:

This article was written by

Anthony Cataldo profile picture
Full name for licenses is Anthony Joseph ("A.J.") Cataldo II, PhD, CPA.  Retired university accounting professor, CMA, CGMA and author of 10 books and 200+ articles and columns in 50+ different journals and outlets, with experience as CFO, Government Auditor, Public Accountant and Litigation Support Expert Witness in cases involving GM, Ford, and other big cap firms.  Years ago, the Securities and Exchange Commission used 3 of my research articles in a fraud case.  I have taught at 10 universities including Northeastern & UCBerkeley (online and during Covid).  I prefer long-term positions combined with the sale of covered calls.  There are exceptions.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of PYPL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (26)

Good call - wow, way off!
People seems oblivious here, anything that goes down is not a “buy” just because it is a tech stock. Doing my own due diligence and shorting this stock since November. Will I buy again? certainly at reasonable price but all authors failed to understand PYPL because of hype till today.
Anthony Cataldo profile picture
@KeepEmotionsOut I nibbled a bit more yesterday.
Anthony Cataldo profile picture
@Anthony Cataldo Mr. Wonderful from Shark Tank was on CNBC and he was more than a little bit annoyed with management and forward guidance.
@Anthony Cataldo Every great business faces ups and downs, it is a part of the long road ahead. Is PYPL really that bad stock? certainly not.
But the timing is always debatable, guidance got to be taken with a pinch of salt.
Paypal is toast. No one selling on there wants to get a 1099 and report sales as income
Anthony Cataldo profile picture
@kmoist I have heard about that. As I recall, there is a way to avoid that, but not legal. Stay well.
HaroldRamis profile picture
@kmoist you must really be moist now.
Anthony Cataldo profile picture
@kmoist I guess eBay is doing the same thing. A pal in my small town rec'd a bill from the IRS and a 1099 for 2019 from eBay and it caught him off guard. In his case, it is an easy fix. He sold stuff he inherited when his father died, so he really just needs to file a Form 1040X with a Schedule D, but I understand that his is a rare case.
you're going to get it a lot cheaper when the fed raises rates and normalizes its balance sheet some.
Anthony Cataldo profile picture
@jeffk100 I think that is possible. I tend to nibble these to initiate a position and put it on my radar screen, then, nibble more during any opportunity to average down. I like the stock. LT. Stay well.
Nothing has changed while market will be more bearish or you can call it less bullish to find solace in wording.
You will get PYPL below $170 after Feb.
Mark this comment, I will revisit in Feb.
Anthony Cataldo profile picture
@KeepEmotionsOut Thanks for the comment. I tend to nibble shares as they go down. Stay well.
jorisderooij profile picture
@KeepEmotionsOut Thanks for giving us an insight into your crystal ball
@KeepEmotionsOut were already close
mwh27 profile picture
Hoping you're right about January effect, but so far not so good. . .
Anthony Cataldo profile picture
@mwh27 Tech stocks are going to get smacked, in the near-term, as Fed increases are anticipated. I like PYPL for a LT buy-and-hold and it is on sale.
Conscentatio Excellentiae profile picture
@Anthony Cataldo Have Paypal ever discussed paying a dividend?
Anthony Cataldo profile picture
@Conscentatio Excellentiae I do not recall them ever doing that. Seigel out of Wharton says still a bull market and rotate into dividend paying stocks during periods of inflation, and all the pundits think indexes will go up for 2 more years, even with inflation, but if Fed hikes 4 times in 2022, instead of 3, as expected and baked in, we could see some bad stuff. I am kind of focused on the metaverse, just like Facebook/Meta Platforms. I think these stocks will do well over the next decade.
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