Online payment platform PayPal (NASDAQ: PYPL) closed trading on Wednesday at $258.36, down 4.91% over the last 24 hours in the wake of news the company was reportedly planning to acquire social media platform Pinterest.
Sources close to the matter indicate that the acquisition stands at a fee of about $45 billion. Interestingly, as PayPal stock struggled on Wednesday, Pinterest shares were soaring by over 7%.
The company’s shares are now trading below the 200-day moving average, a significant indicator of the future price movement. For the long term, the stock now looks to head for the downtrend. Worth noting is that the current PYPL price comes after the stock topped a narrow handle in July by offering investors a buying point at around $296. However, the rally proved short-lived.
Interestingly, PYPL’s low point in its 52-week range is $174.81 per share, with $310 recording the high point for the 52 weeks. The stock also appears to be forming a double bottom.
Investors are looking for PayPal to retest the $290.00 level and then the $300.00 level. If the rebound is swift, investors will be looking for PayPal’s stock to test its all-time high of over $310.
However, with the stock trading below the strong support at $270 the next support level to watch is $264.
Wall Street analysts bullish about PayPal
Elsewhere, 24 Wall Street stock trading analysts have offered 12-month price estimates for PayPal. They place the average price target at $336.62 with a high forecast of $375.00 and a low forecast of $280.00. The average price target represents a 30.29% change from the last reported price of $258.36.
A majority of the analysts at 21 are bullish about PayPal as they recommend buying the stock, while three are for holding the stock.
Impact of PayPal’s growth on the stock price
If the Pinterest deal is confirmed, it will mirror PayPal’s plan to expand beyond its digital-payments business towards the ‘Super App’ status. Last month, the company added several new features and services to become a one-stop financial hub.
The added functionality includes a high-yield savings account, in-app shopping tools, up to two-day early access to direct deposit funds, bill pay, and deals and rewards for users.
In the future, the company intends to expand its features by adding investment capabilities and purchasing cryptocurrency. Therefore, the Pinterest deal will potentially push PayPal into social commerce, which complements its payment business.
The company’s stock will likely benefit further from the financial performance. Over the years, Paypal has maintained a consistent track record of earnings and sales growth.
During the Q2 results, PayPal earned an adjusted $1.15 a share on sales of $6.24 billion, missing analysts’ estimates. Analysts expected the company’s earnings to grow 5% to $1.12 a share from the results.