PayPal stock lands at make-or-break price as experts highlight key risks

PayPal stock price continued its freefall this week, reaching its lowest level since April last year, and technicals point to more downside if it loses a key support.

Analysts are warning about PayPal’s growth

PayPal, a top fintech company, dropped to the key support level at $56.3, down by 40% below its highest point in December 2024 and 80% below its all-time high.

Most Wall Street analysts tracking the company have a bearish outlook of the company, citing the rising competition in the branded checkout business, potential stablecoin disruption, and overall growth concerns in the fintech industry.

In a recent note, a JPMorgan analyst downgraded the stock and adjusted their target to $70 from $80. The analyst noted that the company faces major challenges as the management engineers a turnaround strategy.

Bank of America analysts also downgraded the company, citing the ongoing weakness in the branded checkout business. The analysts wrote:

Morgan Stanley analysts also lowered their view about the company, warning that the improvements in the branded checkout integration were taking longer and were proving to be more time-consuming than expected. Other analysts who have downgraded PayPal stock recently were from Mizuho, UBS, Goldman Sachs, and Piper Sandler.

PayPal’s business has faced many challenges in the past few years, which have affected its growth and profitability. Its revenue growth has moved from double digits during the pandemic to the low single digits. This weakness is happening because of the rising competition in its branded and unbranded businesses  

For example, its checkout business has faced substantial competition from companies in the buy now, pay later industry, like Klarna and Affirm. Its other payment processing business has faced competitors like Wise and Remitly, which are often cheaper.

Additionally, Honey, the coupon company it acquired for over $4 billio,n has faced lawsuits amid allegations of deceptive practices around how it handles affiliate commissions it pays creators.

Analysts anticipate that PayPal’s fourth-quarter revenue will be $8.79 billion, up by 5% YoY, bringing the annual figure to $33.2 billion.

PayPal stock price technical analysis 

The weekly timeframe chart shows that the PYPL stock has remained under pressure in the past few months. It has dropped from a high of $93 in December 2024 to the current $56.3. It is approaching the make-or-break level of $55.7, its lowest level on April 7.

The stock has moved below all moving averages, a sign that bears remain in control. Also, the Relative Strength Index has dropped to 32, its lowest point since April last year.

It is also forming an inverted cup-and-handle pattern, a common bearish continuation pattern. Therefore, a break below the support at $55.7 will signal further downside, potentially to the psychological level at $50.