PYPL Down 8.7% In A Day. How Confident Are You In The Stock?
PayPal (PYPL) stock is down 8.7% in a day. While the fundamentals look okay, history of recovery post-dips is not on your side. Consider the following data:
- A $70 Bil company with $32 Bil in revenue currently trading at $71.45.
- Last 12 month revenue growth of 4.8% and operating margin of 18.7%.
- Has Debt to Equity ratio of 0.2 and Cash to Assets ratio of 0.1
- Currently trading at P/E multiple of 15.5 and P/EBIT multiple of 11.5
- Has returned (median) -33.8% within a year following sharp dips (>30% dip in <30 days) since 2010.
While we like to buy dips if the fundamentals check out – for PYPL, see Buy or Sell PYPL Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and PYPL drops another 20-30% to $50.02 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into PayPal (PYPL) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns.
2022 Inflation Shock
- PYPL stock fell 41.9% from a high of $308.53 on 23 July 2021 to $179.32 on 1 December 2021 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $197.35 on 8 December 2021 , and currently trades at $71.45
| PYPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -41.9% | -25.4% |
| # of Days for Full Recovery | Not Fully Recovered | 464 |
2020 Covid Pandemic
- PYPL stock fell 20.3% from a high of $121.30 on 24 July 2019 to $96.64 on 23 October 2019 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 14 February 2020
| PYPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -20.3% | -33.9% |
| # of Days for Full Recovery | 114 | 148 |
2018 Correction
- PYPL stock fell 20.3% from a high of $121.30 on 24 July 2019 to $96.64 on 23 October 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 14 February 2020
| PYPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -20.3% | -19.8% |
| # of Days for Full Recovery | 114 | 120 |
Worried that PYPL could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.