PYPL - Don't panic! This is a cycle top!Dear subscribers, many investors have experienced a very rough week, let's come together to look at Paypal. NASDAQ:PYPL
Many of us have not experienced such volatility as we have witnessed it in Paypal in a long time. Especially for a company that is now worth just around $145,000,000,000, the sell-off this week was truly frightening.
We followed the news very closely in the last days, from our point of view neither panic or fear are justified when it comes to Paypal.
We all can argee that we hoped for a better outlook for the upcoming year but let's discuss the earnings. The report shows that profits have plummeted by almost 49% this quarter if we compare it to the same quarter of last year. This is a big drop, but PayPal still managed to earn $801 million. The growth of the company was estimated at just over 13%, in the previous year this was just around 20%. These figures were lower than expected, a nasty surprise for many investors!
Worrying, however, is the outlook for the next few years which the management of PayPal has communicated.
Due to the Corona crisis PayPal could count on large growth, as many companies and individuals have made their purchases online. As the Corona crisis draws to an end, the retail sector is recovering and there is less demand for the online payment service. This implies that PayPal will grow slightly slower and will not set any new sales records, but this does not justify the current sell-off when we are speaking in fundamental terms.
The big crash this week can be rather justified that many banks and analysts have downgraded the company and price targets were lowered significantly. The broad mass of investors is shaken in their faith in PayPal, but we as Mendenmein-Capital stand more than ever behind an investment in this company.
It is hard to imagine today's payment systems without PayPal and it is one of the big players in this industry. The company's management has proven to be highly trustworthy in recent years and is expanding its presence in many countries. In addition, PayPal can count on the trust of large funds and institutional organizations; after all, Blackrock as well as Vanguard hold more than 10% of the company's shares.
They are unlikely to reduce their holdings, as most funds purchased PayPal at prices between $30 and $40. Like always, small investors panic while big investors continue to put their trust in PayPal.
Technical explanation of the elliot-wave structure:
The chart structure of PayPal is extremely interesting from an elliot wave analyst's point of view.
Since the IPO in 2015, we have seen a steady bull market that peaked in February 2021. The entire bull market was supported by five different wave 1-2 setups.
These took just under 500 days to form and then supported the nearly +750% rise. Over the last years these setup's could unfold and lasted until the beginning of 2021.
After the high of the cycle (Wave (I)), we built out a large wave A correction and overshot the old all-time high in the context of a wave B. For the entire last half year we were and still are in a strong descending wave C which has discharged in several impulses. We at Mendenmein Capital believe that we are in the final stages of a very large correction and expect the price to reach the $90-60 range. If we focus on the big picture, it becomes clear that we are in an extremely bullish wave 1-2 super cycle setup.
If this correction comes to an end in the next few months, we will start a multi-year bull market that will unlock prices up to +$560 . This is an absolute minimum target according to the eliot wave analysis and will certainly be reached in the next few years.
Disclaimer:
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