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, a 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 resilience, 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 a 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.