I believe that PayPal Holdings, Inc . ( NASDAQ:PYPL ) is destined to re-enter a down channel as a result of several factors, including escalating bearish sentiment, a breach of a crucial technical support level, the increased risk associated with Q4 2022 guidance, and sluggish net new active account growth.
Due to a general economic slowdown and rising inflation, PayPal stock has also raised the risk of its sales growth, hindering its ability to grow its transaction volume in 2022 and 2023. I think PayPal stock is about to test those levels because the company made new lows in July, and business conditions aren’t getting better.
Because of the unattractive risk/reward connection, in my opinion, PayPal stock may decline to $50, which would align with my estimate of its fair value.
Growth in Net New Active Accounts
The slowing of net new active account growth in 2022 is the main problem for PayPal . The fact that PayPal has cleaned up its books and removed many ghost accounts is one factor in the halt in account growth.
In addition, PayPal’s net new active account growth is slowing due to economic challenges, with inflation being a key concern for financial institutions, particularly Fintechs.
In Q2 2022 , PayPal grew its over...
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