PayPal at the lowest since mid-2020 – Will Q4 2021 earnings help it to recover?

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After posting strong gains since mid-2020, following pandemic-inspired online transactions, PayPal Holdings, Inc. (NASDAQ:PYPL) started to decline again as economies reopened and online shopping fell.

At the current $163, the price is the lowest since June 19, 2020. The bottom low happens a day before the payment giant releases the fourth quarter of 2021 earnings.

RBC Analyst Daniel Perlin is optimistic about a stock rebound amid the recent weakness. The analyst expects PayPal’s earnings to beat estimates. Perlin points out that PayPal is an under-monetized asset, and as consumer engagement rises, more monetization opportunities will arise. For this matter, he has assigned the company an outperform rating, with a $230 price target.

Oversold PayPal faces more bearish pressure – What to expect

Source – TradingView

On the weekly chart, PayPal appears oversold after hitting a one-and-a-half-year low, with an RSI reading of 23. However, the bearish weakness escalated after the stock broke below the $179 minor support, while the moving averages offer additional resistance above.

What next? – Key metrics to watch in Q4 2021 earnings

Although PayPal’s fourth-quarter earnings may meet expectations as projected by analysts, investors will be keen on key metrics such as active accounts, the payment volume, and transactions per active account.

These metrics give a clearer picture of potential growth and how PayPal navigates its sector after the economy reopening and growing competition. Consensus beating fourth-quarter earnings plus strong customer and transaction metrics could see the stock rebound strongly.

Earnings miss and/or low consumer and transactions volume could see the stock continue to plummet, with the next low at $121.9 support area. Thus, we urge patience before buying PayPal and only consider a trade based on announced metrics and fourth-quarter performance.

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