Introduction
The last time I reviewed PayPal ($PYPL) here on Substack was nearly a year ago. Back then, I wrote:
“I do not think we have seen the lows yet, not only from a technical, cyclical, or planetary point of view but also looking at the fundamentals…” and,
“Longer-term $PYPL is an interesting candidate for our watchlist to follow from here. I will wait a little longer as I expect the overall market could probably head lower than we are now. I am waiting for the right time and price level to pick up some stocks for a longer-term investment.”
PayPal finally squared out in price and time in December 2022. As W.D. Gann explained once in his Commodity Course on how to determine the duration of market moves:
“Besides the position of the cycle it is in and the position on angles, the height is determined by the width of the base. Reverse rule for bear market. If several weeks or months are taken up for distribution or accumulation, the greater the extent of the move up or down. The longer a market remains in a narrow range, the greater the move and the longer the duration when it starts.” W.D. Gann Commodity Course
The chart below shows how PayPal squared out in price and time with this simple technique. The height of decline is the width of the base in time, after which a new trend may start, and vice versa.
PayPal is in a basing process and trading above the 50 and 200-day moving averages at the time of writing. Accumulation and distribution are taken place. It may be early to step in, but PayPal has already bounced twice on recent lows. If it holds the third time, the odds may favor a new upward trend that has started.
Based on expectations from analysts and FactSet information from FastGraphs, fundamentals in the future look good from a historical perspective on the adjusted (operating earnings), and the price is close to 15x price earnings. The analyst’s rating shows a moderate growth of 17%. De ratio of long-term debt versus capital is healthy. PayPal does not pay a dividend yet, however.
Of course, there are other aspects to consider, so please do not rely on this brief fundamental information and do your further research. On Feb 9, 2023, PayPal’s fourth-quarter results are expected to be released.
So, looking at the technical charts in more detail and from a Gann perspective, what do I expect for the future path of PayPal? If geometry continues to unfold, there is probably a positive path ahead for a larger rebound in price and time.
This analysis is intended for general informational & educational purposes only. Hypothetical or simulated performance based on past cycles has many limitations. Cycles can contract, extend, and invert. Anomalies can occur. Hence, past performance is no guarantee for the future. No advice. Please take a look at our full disclaimer.