Payments processor PayPal (NASDAQ:PYPL) recently made headlines as activist investor Elliott Investment Management took a position in PYPL stock. The firm is likely trying to influence the company. Also, investors are digesting a strong Q2 earnings release from earlier this week.
Earnings season is charging ahead like a bull. There have been some huge beats and a few horrendous misses along the way. Luckily, PayPal fell on the former side. After beating on Q2 estimates for both revenue and earnings per share (EPS), PayPal is looking strong indeed.
Meanwhile, prospective PYPL stock investors should be aware of a big-money investor with a stake in PYPL stock. This investor could alter the way PayPal conducts its business, so be sure to learn the details before taking a position.
What’s Happening With PYPL Stock?
Frankly, it’s just a great time to own shares of PayPal. There’s plenty of room for upside, and value-focused investors should be jumping at the chance to buy the stock.
Consider that PYPL stock’s 52-week high is $296.70, yet it’s been trading for less than $100. If the stock shoots higher from here, you might regret not owning at least a few PayPal shares in your portfolio.
Also, there’s value to be found here, as PayPal’s trailing 12-month price-to-earnings (P/E) ratio is quite reasonable at 32.3.
Activist Investor Gets Active
Now, here’s a major piece of news concerning PayPal. According to a Bloomberg report, Elliott Investment Management has been building up a stake in PayPal. The Wall Street Journal also reported on Elliott’s stake in the company. However, neither of those sources initially mentioned the size of Elliott’s stake in PayPal.
However, we now know it’s sizable, as Elliott revealed a $2 billion stake in the company as of Aug. 2. It seems clear Elliott wants to influence PayPal. The firm wouldn’t likely be able to achieve this without such a large stake.
Bloomberg reported that Elliott plans to push for PayPal to accelerate its cost-reduction efforts, which have included firing workers and closing down offices. Sure, it’s unfortunate when a company does these things, but there can be benefits to PayPal’s bottom line.
It will be interesting to see how the firm influences PayPal. Hopefully, the outcome will be positive for all stakeholders.
PYPL Stock: What You Can Do Now
It’s important to keep an eye out for further developments with PayPal and Elliott Investment Management. In the meantime, feel free to seek out great value and actively invest in a few shares of PayPal today.
On the date of publication, David Moadel 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.
