Key Insights
- PayPal stock price gapped down 20% from $52.33 to $41.70 on Feb. 3 after an earnings miss.
- Chaikin Money Flow turned positive on Feb. 3, showing institutions accumulated when retail panicked and sold shares.
- Fibonacci retracement identifies $58 as a key resistance level representing 23% upside from the current $47 price.
PayPal stock price gapped down 20% on Feb. 3 as earnings missed expectations. The CEO announced he was stepping down, and upon learning this, the retail investors panicked. Volume exploded to 141 million shares.
But institutions started buying that same day. Chaikin Money Flow turned positive on Feb. 3. Right when everyone else was selling. Now the stock sits at $47 after news of a Stripe acquisition. The question is whether institutions see something retail missed.
Institutions Bought as Retail Panicked on Earnings
The gap down created unrest. The PayPal stock price opened at $42.88 and closed at $41.70. Sellers overwhelmed buyers. But Chaikin Money Flow told a different story.
CMF measures buying and selling pressure using volume and price movement. When it crosses above zero, that signals accumulation.
CMF turned up but is yet to cross the zero level. Institutions usually see opportunities where retail sees disaster. They have longer time horizons and more patience. The gap down, therefore, explains why they started buying more, offsetting the selling to a certain extent.
However, a cross above the zero line is needed to turn the netflow into the positive zone.
The stock dropped to $38.46 by Feb. 12. That became the local bottom. From there, it recovered about 22% to current levels around $47. Year-to-date, it remains down roughly 20%.
Fibonacci Points to $58 as Stripe Boosts PayPal Stock Price
Technical analysis using Fibonacci retracement identifies $58 as key resistance. The measurement runs from the Oct. 20 swing high down to the Feb. 12 swing low at $38.46. That calculation points to the 0.618 retracement level at $58. That’s the most critical point now.
PayPal stock price at $47 has about 23% upside to reach that target. Breaking back above $58 would signal a full recovery from the earnings disaster.
The Stripe acquisition rumor on Feb. 24 gave bulls a catalyst. Reports suggested early talks between PayPal and the privately valued $159 billion Stripe. This led to a 7% surge yesterday.
However, a bigger move up might require a bigger, fundamental catalyst. PayPal’s PYUSD stablecoin adds another angle. Market cap crossed $4 billion, making it the sixth-largest stablecoin.
It is expanding across Ethereum, Solana, and other chains. A Stripe deal could boost crypto ambitions since both companies have blockchain interests.
The valuation supports the bullish case. PayPal trades at 8 to 10 times forward earnings. The historical average is over 20 times. At current prices, a lot of bad news is already priced in.
PayPal Stock Cup Pattern Needs $42 Hold for Breakout
The chart structure shows a potential cup forming. The left side was the crash from $52 to $38. The right side is the recovery to $47. Now comes the handle phase, where consolidation happens.
The $42 level is critical support. The PayPal stock price needs to hold above this during any pullback.
A break below $42 weakens the pattern. It would suggest the recovery is failing. The real danger is $38. That’s the February 12 low.
Losing that support invalidates the bullish setup completely. The next target on the downside could be $30 or lower. But if $42 holds and the stock breaks above $58, analysts see $70 to $79 as extended targets.
That would represent 50% total upside from current levels. Free cash flow remains strong. The company generates $5 to $7 billion annually, supporting aggressive share buybacks. A $15 billion buyback program is ongoing. This creates a floor under the stock.
Total payment volume grew about 7% to 10% year-over-year. Revenue growth slowed to 4%, but it’s still growing. The business isn’t broken. Nearly 440 million active accounts process $1.79 trillion in payment volume.
The Feb. 3 gap down might end up being the low for the PayPal Stock price. Institutions are betting on it. They bought the panic. Now they wait for the recovery.