PayPal shares dove more than 13% on Tuesday following the company’s quarterly earnings report earlier in the morning.
Shares had been consolidating for the last two months between $85.90, Today's selling pressure took the stock below $80.00 on heavy trading volume.
The sell-off comes despite the company beating its earnings per share and revenue target for the quarter.
PayPal’s results showed earnings per share were seven cents better than the $1.12 EPS consensus from Wall Street. In addition, revenue came in at $8.36 billion compared to expectations of $8.25 billion expectations.
The company added a cautiously out bullish outlook, raising revenue and earnings per share guidance for both the next quarter and fiscal year 2025.
Investors’ problem with the report was a drop in the volume of transactions as PayPal is feeling pressure from competition in their industry.
Investors were paying close attention to the results given the recent partnership agreement between “X” and Visa.
Shares of PayPal have been in the process of a technical turnaround after the stock came lows near $50.00 and 2023. The company's focus on the growth of the social payment platform helped raise the stock price to $90 over the last year. But growing competition in the space had investors looking for a much more optimistic outlook from PayPal’s to continue the rally.
Today’s move breaks that momentum as the stock has shattered through its 50-day moving. That break and the severity of the drop forecasts a poor 4–6-week period in which the stock is likely to see additional selling.
PayPal bulls will need to maintain a focus on the $73 price as this is where the stock’s next technical support should reside. That price represents PayPal’s 200-day moving average. This trendline, along with the 50-day, are considered two of the most important technical indicators for a stock.
Failure for PYPL shares to remain above that 200-day moving average will result in a long-term correction that would target $67.50.
PayPal shares remain in a long-term bullish trend though should be considered short-term neutral with a risk of targeting $67.50 before next quarter’s earnings report in May.