Why PayPal Shares Are Down By More Than 20% From Recent Highs?The stock is under pressure in today’s trading after the company announced that it would buy a digital asset security company Curv.
PayPal Video 08.03.21.
PayPal Expands Its Cryptocurrency Market Presence With The Purchase Of Curv
PayPal shares have declined by more than 20% from highs that were reached back in mid-February amid broad sell-off in the tech space.
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Today, the stock found itself under pressure after the company announced that it agreed to buy Curv, a provider of cloud-based infrastructure for digital asset security from Israel. According to recent reports, the deal is valued at less than $200 million.
PayPal has stepped into the cryptocurrency territory back in October 2020 when it announced that it would launch a service that would enable users to buy, hold and sell cryptocurrency.
Bitcoin’s strong start of the year has provided additional support to PayPal shares and pushed them to all-time highs at $309.14. Not surprisingly, the recent pullback in the cryptocurrency market served as a bearish catalyst for PayPal stock, although the main reason for PayPal’s weakness in the last few weeks was the broad weakness of the tech market segment.
What’s Next For PayPal?
PayPal shares have quickly moved into the bear market territory after testing all-time high levels in February, but such moves are common in today’s market.
PayPal stock is trading at more than 40 forward P/E for 2022 so the stock is richly valued by the market. At this point, the main risk for PayPal is the continuation of the sell-off in the U.S. government bond market which will push yields even higher.
As yields rise, investors and traders become concerned about high valuations which is bearish for high-flying tech stocks like PayPal.
At the same time, PayPal has already pulled back by more than 20% from recent highs, so bargain hunters may be interested in the company’s shares. As PayPal is increasing its presence in the cryptocurrency sphere, the dynamics of the cryptocurrency market may have a notable impact on the stock.
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