Why Paul Tudor Jones is bullish on PayPal

In a recent 13F filing, Tudor Investment Corp., the investment firm founded by legendary trader Paul Tudor Jones revealed initiating a stake in PayPal Holdings Inc. (NASDAQ:PYPL), acquiring approximately 888,239 shares valued at $59.5 million during the first quarter of 2024. Alongside this equity purchase, the firm also acquired 64,800 Call Options on PayPal’s stock.

In addition to PayPal, Tudor Investment Corp. initiated a new equity stake in Micron Technology (NASDAQ:MU), acquiring approximately 523,000 shares. On the other hand, the firm exited its equity holdings in Bristol Myers (NYSE:BMY), Financial Select Sector SPDR Fund (NYSEARCA:XLF), and American Tower (NYSE:AMT). Furthermore, Tudor Investment Corp. increased its stake in Abbott Laboratories (NYSE:ABT) and reduced its stake in Nvidia (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), and Visa (NYSE:V).

Despite facing challenges, PayPal has been showing a promising turnaround trajectory lately, drawing optimism from investors and analysts alike. Recent financial reports have showcased PayPal’s robust performance, with the company reporting a double beat in its Q1 FY2024 earnings call. With net revenues reaching $7.69 billion and adjusted earnings per share standing at $1.08, PayPal has exceeded market expectations, driven by strong growth in Total Payment Volume (TPV) and active accounts.

Analysts have been closely monitoring PayPal’s valuation and growth prospects in light of its recent performance and strategic initiatives. Despite concerns over margin pressures and conservative guidance for FY2024, PayPal’s inherent undervaluation and potential for future expansion have attracted bullish sentiment. With forward price-to-earnings (P/E) ratios indicating undervaluation compared to historical averages and industry peers, a lot of analysts see an opportunity for significant upside potential in PayPal’s stock.

Now, let’s explore PayPal’s recent stock performance and what the charts may reveal about its future direction. By examining key indicators and trends, we can better understand the factors driving Jones’s bullish stance and what lies ahead for PayPal investors.

Upside strength remains but needs to cross near-term resistance soon

In our previous article on PayPal, ‘PayPal’s Q1 success shifts market sentiment’, we highlighted how the stock has been on a bullish trajectory since October 2023. That upward trend remains intact, even though the stock has dropped since then.

PYPL chart by TradingView

In that article, we suggested that traders bullish on the stock wait for a little while for the stock to drop and then buy the stock. The stock might not have dropped much from those levels, but it has undergone a time-based correction during that time and can be bought at current levels with the same stop loss at $58.2. If the bullish momentum continues, we might see a breakout above $68 soon, which can take the stock to $76 levels.

Traders who are bearish on the stock, must avoid shorting the stock at current levels and wait for it to break below its bullish trendline. If the stock gives a daily closing below $62, they can initiate a short position then, keeping a stop loss at $68.5 and a profit target at $52.4.  

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