Trading Strategies For PayPal Stock Before And After Q3 Earnings

PayPal Holdings, Inc PYPL opened flat on Wednesday before falling on well-below-average-volume. The company is set to print its second-quarter financial results after the markets close.

Analysts expect the company to report EPS of $1.23 on revenues of $7.38 billion for the quarter ending Sept. 30.

On Tuesday, Wells Fargo analyst Andrew Bauch initiated coverage with an Equal-Weight rating on PayPal and announced a price target of $55. The price target suggests 6% upside for the stock. Truist Securities analyst Andrew Jeffrey maintained a Buy rating and cut the price target from $85 to $70. Read More Here…

When PayPal printed its second-quarter earnings report on Aug. 2, the stock dropped almost 12.32% the following day before continuing in its downtrend, which brought PayPal to an Oct. 27 low of $50.25.

For that quarter, PayPal reported earnings per share of $1.16, beating a Street estimate of $1.05 per share. The company posted a top-line beat, reporting revenues of $7.29 billion, compared to the $6.59-billion consensus estimate.

From a technical perspective, PayPal looks bearish heading into the event, trading in a downtrend and settling into a possible bear flag pattern. 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’s possible bear flag was printed between Oct. 17 and Wednesday, with the downward sloping pole formed over the first nine days of that timeframe and the flag forming since. The measured move, if the stock breaks down from the flag on higher-than-average volume, is about 12.7%, which suggests the stock could drop toward the $45 mark.

• PayPal is also trading in a strong downtrend, making a series of lower highs and lower lows. The most recent lower high was formed on Oct. 24 at $54.61 and the most recent lower low was printed at the $50.25 mark on Oct. 27.
• On Wednesday, PayPal attempted to break above the eight-day exponential moving average but failed. If the stock receives a bullish reaction to its earnings print and rises above that area, the bear flag will be negated.
• If PayPal suffers a bearish reaction to its earnings print and falls under the Oct. 27 low-of-day, the downtrend will be confirmed as intact and selling could accelerate.
• PayPal has resistance above at $55.86 and at $59.32 and support below at $50.25 and at $43.80.

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