Trading Strategies For PayPal Stock Before And After Q4 Earnings

PayPal Holdings, Inc PYPL is set to print its fourth-quarter financial results after the markets close on Thursday.

Analysts expect the company to report EPS of $1.20 on revenues of $7.39 billion for the quarter ending Dec. 30.

Ahead of the earnings print, Mizuho analyst Dan Dolev maintained a Buy rating on PayPal and cut the price target by $5, from $105 to $100. The new price target suggests 23% upside for the stock.

When PayPal printed its third-quarter earnings report on Nov. 3, the stock plunged almost 7% at one point the following day but ran into a group of buyers who caused the stock to close down just 1.62% on the day.

For that quarter, PayPal reported earnings per share of $1.08, beating a Street estimate of 96 cents per share. The company also posted a top line beat, reporting revenues of $6.85 billion compared to the $6.82-billion consensus estimate.

From a technical perspective, PayPal looks set to trade lower due to a downtrend that has developed on the stock’s chart. Of course, holding a position in a stock over earnings can be akin to gambling, as stocks can rise following an earnings miss and fall after reporting a beat.

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The PayPal Chart: PayPal reversed into an uptrend on Dec. 22, making a series of higher highs and higher lows. On Thursday, the stock negated that uptrend by falling under the most recent higher low of $79.54, which was printed on Jan. 30.

• On Feb. 2 and Feb. 3, PayPal temporarily regained support at the 200-day simple moving average (SMA), which proved to be a bull trap because on Monday, PayPal gapped down and fell back under that area intraday. If PayPal pops higher following a bullish reaction to its earnings print, the stock may find resistance at the 200-day SMA.
• If PayPal continues to trade lower following the earnings print, the stock may find support at the 50-day SMA, which is trending near the $76 mark. If PayPal loses that area as support, a steep downtrend could occur.
• PayPal has resistance above at $82.07 and $86.81 and support below at $77.36 and $73.27.

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