Today is a tough day on Wall Street and for tech stocks in general. But unfortunately for PayPal (NASDAQ:PYPL) stock bulls, the fintech payments company is getting hit harder than others. But if you’re a believe in PayPal, then today’s losses represent an interesting buying opportunity. PYPL stock is down more than 5% in morning trading, more than doubling the losses incurred so far by the Nasdaq composite. It is an unfortunate reversal of fortune for PayPal, which is still sitting on gains of nearly 13% over the last month.
What is pushing the market down today? The biggest headwind is news of more sanctions by the U.S. and Western nations against Russia for its war against Ukraine. In addition, some members of the U.S. Federal Reserve (Fed) indicated that they were open to even more aggressive moves to increase interest rates this year to rein in inflation. Federal Reserve Governor Lael Brainard, who is awaiting Senate confirmation to take the No. 2 spot on the Federal Reserve, spoke at a conference on Tuesday. “Currently, inflation is much too high and is subject to upside risks,” Brainard said. “The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted.”
Inflation is a big deal to payments companies like PayPal. If consumers have less money to spend, then payments companies suffer. PayPal tried to make some waves this week by rolling out a new PayPal Cashback credit card that would encourage shopping on PayPal. But if the Fed sees inflation as “much too high and […] subject to upside risks,” then the impact of a new credit card could certainly be muted for PYPL stock.
In its most recent fourth quarter earnings report, PayPal reported revenue of $6.92 billion, which beat analysts’ expectations of $6.89 billion. Earnings came in at $1.11 per share, just missing expectations of $1.12 per share. At just over $111 per share today, PayPal is currently trading close to its 52-week low of $92.25. The consensus price target from 43 analysts who follow PYPL stock projects it at $178.28, which represents a potential 59% upside.
What is the bottom line? PayPal, which was trading at more than $300 last summer, has a ton of upside at this price point. PYPL stock is a “Buy.”
On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
