Will PayPal Stock Grow After Its Launch of Crypto Checkout Service?

by Trefis Team
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PayPal’s stock (NASDAQ: PYPL)  has risen by 5.7% over the last five trading days. In comparison, the broader S&P500 has risen by 2.4% over the last five trading days. The stock rose after the company announced  on March 30, the launch of “Checkout with Crypto” which will allow users to pay with cryptocurrencies. Now, the users holding Bitcoin, Ethereum, and Litecoin will be able to instantly convert their cryptocurrencies into U.S. dollars at checkouts to make purchases through PayPal. But will the company resume its upward trajectory over the coming weeks, or is a fall in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price using 20 years of historical stock data, returns for PayPal’s stock average around 5% in the next one-month (twenty-one trading days) period after experiencing a 5.7% rise in a week (five trading days). Further, the stock is likely to outperform S&P500 returns by 2.8% over the next month (twenty-one trading days).

But how would these numbers change if you are interested in holding PayPal’s stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test PayPal’s stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF PYPL stock moved by -5% over five trading days, THEN over the next twenty-one trading days, PYPL stock moves an average of 5.8%, which implies an excess return of 3.7% compared to the S&P500.

More importantly, there is a 74.1% probability of a positive return over the next twenty-one trading days and a 76.8% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of PayPal Holdings Stock Movements

Question 1: Is the average return for PayPal Holdings stock higher after a drop?

Answer:

Case 1: PayPal Holdings stock drops by -5% or more in a week

Case 2: PayPal Holdings stock rises by 5% or more in a week

Is the average return for PayPal Holdings stock higher over the subsequent month after Case 1 or Case 2?

PYPL stock fares better after Case 1, with an average return of 5.8% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 4.2% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how PayPal Holdings’ stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold PayPal Holdings stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For PYPL stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for PayPal Holdings after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

PYPL’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for PayPal Holdings stock by changing the inputs in the charts above.

While PayPal stock may have moved, think Bitcoin could disrupt the banking industry? Looking for upside from Bitcoin adoption, without buying into the cryptocurrency itself? Check out our theme on Cryptocurrency Stocks.

See all Trefis Price Estimates and Download Trefis Data here

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