Why Is PayPal (PYPL) Stock Down Today?

  • PayPal (PYPL) stock is sinking after the company leaked a new potential rule that would fine users $2,500 for posting “misinformation.”
  • PayPal apologized for causing confusion and indicated that it does not intend to implement this policy.
  • A DLCA analyst recently identified PYPL stock as a potential “fallen angel.”
PayPal logo overlays daylight photo of corporate building
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PayPal (NASDAQ:PYPL) stock is sinking about 5% in early trading and trending on social media today. The fintech company is in the spotlight after a leaked document indicated it was considering fining users who post “misinformation.” The potential fine would be $2,500 per violation. Many individuals harshly criticized the idea.

In a statement, PayPal said the policy was issued in “error” and the company apologized “for the confusion.” Additionally, a PayPal spokesperson indicated the company would not seek to penalize its customers monetarily for spreading company-defined misinformation.

Here’s what investors should know about PYPL stock moving forward.

PYPL Stock: More About the Leaked Policy

PayPal’s hypothetical new rule was posted as part of an updated “Acceptable Use Policy” (AUP) released by the company. AUPs set out the conditions that govern users of the platform.

The “prohibited activities” reportedly identified by the leaked AUP include the “sending, posting, or publication of messages, content, or materials” that meet certain criteria and “promote misinformation.”

PayPal also noted that it would have “sole discretion” under the potential policy to determine what constitutes misinformation from users.

PYPL Stock as a ‘Fallen Angel’

On Oct. 7, DLCA analyst and managing partner Sarat Sethi identified PYPL stock as one of three possible “fallen angels.” Sethi defines these as stocks that should perform well long-term but have declined sharply in 2022 because of market weakness or transitory situations. Two other names that may be in the same category are Uber (NYSE:UBER) and Constellation Brands (NYSE:STZ), according to the analyst.

PYPL stock has tumbled 54% so far in 2022 and more than 65% over the last 12 months. Shares now have a forward price-earnings (P/E) ratio of 19.4.

On the date of publication, Larry Ramer did not hold (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.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.


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