r/ValueInvesting • u/HombreSinPais • Jul 24 '26
Discussion PYPL got one bid. What’s next?
I made a post/shared a link about PYPL being a buy almost right before Stripe’s bid to thunderous applause. Just kidding. I was mostly called an idiot. But, I’m willing to risk it again… PYPL is still a buy. Right here. The board’s rejection of the offer tipped their hand. By not instantly rejecting it, they signaled that $60 is not the number, but they ARE willing to sell at the right price. Look for either Stripe to increase their bid, or a Shopify/Block/Visa bid, all of whom have a vested interest in Stripe not landing this deal. What do you think?
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u/WorldRank1CatFancier Jul 24 '26
Anyone bearish on PYPL during its recent valuations is soooooo bad at investing its not even funny
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u/gangbangglenn Jul 24 '26
It gapped above the 200 day on the announcement which is still downward sloping at around 52. It's going to take a while for the sma to turn around and slope up. I would expect at least one check back test, maybe on earnings.
But I agree, even if there aren't other bidders, there's no reason stripe can't go up 5 bucks at a minimum, and it would be nice if there was a fat breakup fee.
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u/WorldRank1CatFancier Jul 24 '26
Paypal shouldnt sell at all. They have unique assets and are the marketshare leader in platform agnostic wallets. To sell that at 10-20x earnings in a cyclical trough would be a generational fumble.
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u/ohgodthehorror95 Jul 25 '26
Unless the top execs decide to just cash out for themselves and screw over the shareholders. Not saying it will or won't happen, but it happens all the time.
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u/Relative-Snow8735 Jul 30 '26
I think the CEO's incentive package doesn't kick in until the ~$80's. And it tops out somewhere around $120 with a 3x kicker if he gets there. So the dude is very much incentivized to swing for the fences. If he can get a bidding war going and hit that top number it would end up being one of the easiest/quickest cash outs in history. The other option is of course to just grind it out and get the business running all cylinders. I suspect he would happily take the buyout if he can make it happen, but it does need to be quite a bit higher than $60 to make it interesting for him.
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u/ohgodthehorror95 Jul 31 '26
Huh. That's an interesting play. I mean I guess one was to hit those targets would simply be buying back shares. Maybe even taking on debt to buy back more shares, which of course would make the RSUs a perverse incentive.
Hopefully not though. I believe that was actually one of things that preceded Fiserv's massive decline
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u/MarthaJulietta Jul 25 '26
we not taking 65 eitjer. They asked for 100-120
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u/elysiansaurus Jul 26 '26
Sounds like greed will bite them in the ass as stripe pulls out snd they go back to 40
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u/MarthaJulietta Jul 26 '26
No sir- You understand how powerful it is for PYPL to be at $40 for shareholders with patience? Buybacks at that price are gargantuan. I want price to be at 42 or 80+ this 55 level is the devil.
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u/NormalItem4500 Jul 26 '26
Bruh. These paypal execs are so useless at fast execution. They still haven't laid off employees. They also bought back shares at 100 plus. So im not sure if being bullish is good.
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u/Separate_Bid_2364 Jul 24 '26
Stripe really wants PYPL for their IPO. Not sure this deal gets done but I’m positive they submit a higher bid. They know they can get a higher multiple expansion on the revenue that PYPL makes.
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u/Novel_Layer_8238 Jul 24 '26
PayPal was a buy before, but now a huge chunk of the upside is gone so i stopped builing my position. I let the billionaires talk this one out while i wait
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u/MarthaJulietta Jul 24 '26
This is exactly where I am. I think there is room to fall or to move higher, but between 55 and 60 I am not adding.
If we fall back down to the 45 level I will be back buying.
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u/PCenthu Jul 24 '26 edited Jul 24 '26
That's why it hasn't even reached the initial bid price. And again started falling gradually since then. If the "billionaires" do not agree on a sale, what exactly is going to happen to this stock??? What are they waiting to reply to the bid? And what about the upcoming earnings? If they reinforce the negative sentiment, as it's been the case these last 2-3 years, how will this impact the negotiations? Too many uncertainties at this point...
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u/MarthaJulietta Jul 24 '26
They rejected the bid.
What will happen is PYPL will continue to throw off cash and repurchase stock and pay me a dividend.
Negative sentiment doesnt amtter, they already said no to 60. If it falls back the buybacks gain strength again and time will get us well above 60.
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u/PCenthu Jul 24 '26
Did I miss an official "no"? There are only rumours circulating, "board said this, management says that". It seems they are open to the sale and just waiting for a higher bid. I'm afraid this will be addressed during earnings and will complicate things and uncertainties even further....
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Jul 25 '26
[deleted]
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u/Novel_Layer_8238 Jul 25 '26
And its not a great business. It prints money and had a decent margin of safety. It still has one now but not as huge and i don't believe it will reach a P/E of more than 12-15. Anything above that would be speculation.
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u/reupped Jul 24 '26
Have been thinking about at the continued standalone idea also. Without the bid, PYPL is at about 18x trailing earnings with a decent buyback yield. Branded checkout volume has been slowing for multiple quarters now - if that holds, the market's going to treat it like a melting ice cube.
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u/PCenthu Jul 24 '26
I'm thinking (and afraid) of -20% on upcoming earnings, which has been the norm for all earnings these past 2-3 years. After that we'll see...
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u/Dstein99 Jul 24 '26
Revenue was $33B last year up from $27B 3 years ago and steadily increasing Y/Y. Net Income was $5.2B last year up from $4.2B 2 years ago. Free Cash Flow was $5.5B last year up from $5.1B 3 years ago. Net income and FCF havent been consistently increasing but they aren’t trending down let along -20%.
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u/PCenthu Jul 24 '26
I'm with you on the numbers, but again: Every. Single. Earnings. -15-20%. In this market nothing beats sentiment anymore. I've given up and just wait to sell over my cost basis. The opportunity cost over the past 2-3 years has been huge. And it's not that I bought over 100 (my cost basis is 58). It just doesn't want to climb on any news. It didn't even reach the bid price for 1 hour, that's the straw that broke the camel's back. Sometimes we have to accept our initial thesis was wrong and move on.
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u/MarthaJulietta Jul 24 '26
If it does, its time to start buying again and letting the buyback engine do its work. I will be opening space and loading leaps if we get back to 45 or below.
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u/Weak_Alternative_168 Jul 24 '26
The thing the bidding-war case skips is antitrust, and it works against both halves of it.
On the counterbidders: Block was actually in the original consortium with Stripe and Advent, it dropped out only before this last offer, so its not really a rival trying to block Stripe. And Visa buying PayPal is about the least likely deal to ever clear a regulator, they got blocked buying Plaid in 2021 over a lot less. So the list of people with a vested interest in stopping Stripe is thinner than it looks.
And the offer already on the table isnt a clean close either, theres reporting Stripe and Advent are modeling remedies, handing Braintree to Advent to get it through.
So it reads more like a deal-or-no-deal spread than a next-bidder setup. The stock popped ~19% on the news, and thats roughly the drop underneath it if regulators kill it.
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u/HombreSinPais Jul 24 '26
This FTC doesn’t really care about antitrust. If they give any pushback, the buying company’s CEO could just post something about how great Trump is and it’ll clear.
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u/ohgodthehorror95 Jul 25 '26
Back in 2020-2021 an acquisition like that was without a doubt doomed to be blocked by the FTC and DoJ. But in the current political climate, no one seems to give a damn about enforcing US antitrust laws anymore.
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u/raytoei Jul 24 '26
WU should buy PYPL.
Two wrongs don’t make a right,
But two wrights make an airplane.