PayPal hits oversold level not seen since 2016
Online payment processor and portal PayPal (Nasdaq: PYPL) peaked at $121.48 back in July and has now fallen for four straight weeks. The selling that has hit the stock coincides with weakness in the overall market, but it has caused an overbought/oversold indicator to reach its lowest level since June 2016. The weekly stochastic readings, specifically the %K reading, have dropped below the 20 level for the first time in over three years.
Even during the fourth quarter selloff in the overall market, PayPal held up better than most stocks, and then when the market rallied in the first quarter the stock moved up over 25% from the December low through the end of March. It continued to climb in the second quarter and half way through July.
PayPal did drop below its 52-week moving average during the fourth quarter, but the oscillators never reached oversold territory. The longer-term moving average of 1o4 weeks never came in to play.
Looking at a shorter term indicator, the Tickeron Technical Analysis Overview noted that “the lower Bollinger Band was broken -- a price increase is expected as the ticker heads toward the middle band, which indicates a buy or call consideration for traders. In 20 of 26 cases where PYPL's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued Uptrend are 77%.”
The fundamentals for PayPal are really strong. The company has been able to grow earnings at an average annual rate of 28% over the last three years. The most recent quarterly report showed earnings growth of 48% on a year over year basis. Analysts expect earnings to grow by 30% for 2019 as a whole.
Sales have also grown at a solid pace, growing by 19% per year over the last three years and growing by 12% in the most recent quarter.
The management efficiency measurements are slightly above average with a return on equity of 18.6% and a profit margin of 23%. It is also worth noting that the company doesn’t have any long-term debt.
One of the biggest concerns for PayPal at this time is its valuation. The Tickeron Valuation Rating is a 72 and indicates that the company is slightly overvalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks.
The sentiment toward PayPal is slightly more optimistic than the average stock. According to the Wall Street Journal, there are 39 analysts following the company. There are 30 “buy” ratings, eight “hold” ratings, and one “sell” rating. This puts the buy percentage at 76.9% and that is slightly above the high end of the normal range of 65% to 75%. One interesting note about the analysts’ ratings is that there were 44 analysts following the company just two months ago.
The short interest ratio is also slightly skewed to the optimistic side with a reading of 2.0 at this time. There is also an interesting development on this indicator. The number of shares sold short dropped from 15.5 million shares to 12.4 million shares from mid-July through the end of July. This drop in short interest happened as the stock was falling, so it would appear as though short sellers were taking gains.
The overall outlook for PayPal is pretty strong based on the fundamentals and the oversold reading from the weekly stochastics. The sentiment is a little worrisome, but given the way the company has performed in recent years, the optimism seems to be warranted.
Aroon Indicator for PYPL shows an upward move is likely
PYPL's Aroon Indicator triggered a bullish signal on October 15, 2025. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 225 similar instances where the Aroon Indicator showed a similar pattern. In of the 225 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 57 cases where PYPL's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
PYPL moved above its 50-day moving average on October 23, 2025 date and that indicates a change from a downward trend to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where PYPL advanced for three days, in of 306 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day RSI Indicator for PYPL moved out of overbought territory on October 10, 2025. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 32 similar instances where the indicator moved out of overbought territory. In of the 32 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Momentum Indicator moved below the 0 level on October 16, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on PYPL as a result. In of 92 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for PYPL turned negative on October 15, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 49 similar instances when the indicator turned negative. In of the 49 cases the stock turned lower in the days that followed. This puts the odds of success at .
The 10-day moving average for PYPL crossed bearishly below the 50-day moving average on October 23, 2025. This indicates that the trend has shifted lower and could be considered a sell signal. In of 14 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where PYPL declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
PYPL broke above its upper Bollinger Band on October 06, 2025. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. PYPL’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.295) is normal, around the industry mean (13.136). P/E Ratio (14.916) is within average values for comparable stocks, (36.061). Projected Growth (PEG Ratio) (0.733) is also within normal values, averaging (1.408). PYPL has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.039). P/S Ratio (2.164) is also within normal values, averaging (130.500).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. PYPL’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 72, placing this stock worse than average.
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General Information
a provider of digital and mobile payments on behalf of consumers and merchants
Industry SavingsBanks
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