Is PayPal Stock Built to Withstand More Downside?
PayPal (PYPL) stock is down 24.1% in 5 trading days. The recent slide reflects concerns around missed earnings, weak profit outlook, and slowing branded checkout growth amidst a leadership change, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where PayPal stands today.
- Size: PayPal is a $38 Bil company with $33 Bil in revenue currently trading at $41.03.
- Fundamentals: Last 12 month revenue growth of 4.3% and operating margin of 19.3%.
- Liquidity: Has Debt to Equity ratio of 0.26 and Cash to Assets ratio of 0.13
- Valuation: PayPal stock is currently trading at P/E multiple of 7.3 and P/EBIT multiple of 5.7
- Has returned (median) -27% within a year following sharp dips since 2010. See PYPL Dip Buy Analysis.
These metrics point to a Moderate operational performance, alongside Very Low valuation – making the stock Attractive. For details, see Buy or Sell PYPL Stock
That brings us to the key consideration for investors worried about this fall: how resilient is PYPL stock if markets turn south? This is where our downturn resilience framework comes in. Suppose PYPL stock falls another 20-30% to $29 – can investors comfortably hold on? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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2022 Inflation Shock
- PYPL stock fell 83.7% from a high of $308.53 on 23 July 2021 to $50.39 on 27 October 2023 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 $91.81 on 20 January 2025 , and currently trades at $41.03
| PYPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -83.7% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
2020 Covid Pandemic
- PYPL stock fell 31.2% from a high of $123.91 on 19 February 2020 to $85.26 on 23 March 2020 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 5 May 2020
| PYPL | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -31.2% | -33.9% |
| Time to Full Recovery | 43 days | 148 days |
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% |
| Time to Full Recovery | 114 days | 120 days |
Feeling jittery about PYPL stock? Consider portfolio approach.
Smart Investing Begins With Portfolios
Stocks can jump or crash but long term success comes from staying invested. The right portfolio helps you ride gains and cushion single stock drops
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. 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.