PayPal Holdings (NASDAQ:PYPL), a digital payments and consumer/merchant transaction platform, closed at $53.66, down 12.71%. Shares fell after reports Stripe and Advent abandoned their reported roughly $50 billion takeover pursuit; investors are watching turnaround execution. Trading volume reached 35.9M shares, coming in about 124% above its three-month average of 16.0M shares. PayPal Holdings IPO'd in 2015 and has grown 46% since going public.
How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) fell 0.27% to 7,710, while The Nasdaq Composite (NASDAQINDEX:^IXIC) lost 0.52% to 26,402. Among global payments and digital financial technology peers, Fiserv closed at $53.18, up 1.14%, after its earlier-this-month guidance cut underscored margin pressure in the group.
What this means for investors
When Advent International and Stripe initially teamed up to make a $53 billion bid for PayPal, I said I would understand if investors cashed in, because the deal falling through could cause a significant drop. That's exactly what happened today as Advent and Stripe abandoned their bid, leaving PayPal trading back near its 50-day moving average.
Following the drop, PayPal still trades at only 7.5 times free cash flow, so I am happy to continue holding my shares, even though the company's high-growth days are in the rearview mirror and new management hasn't had time to make a major impact.
Another reason I still hold the stock is that the power of the PayPal and Venmo brands seems more valuable than the $46 billion market cap PYPL currently commands. A lot of value still remains in this stock, but it's impossible to tell if and when it may be extracted, whether through a full sale, partial sale, spin-off, or reinvigorated growth -- whichever may (or may not) happen.
Josh Kohn-Lindquist has positions in PayPal. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short September 2026 $47.50 calls on PayPal. The Motley Fool has a disclosure policy.