$228 million dollar loss for PayPal!

are you thinking about investing in her trading PayPal stock then you need to know about the 228 million dollar tax loss they just revealed with earnings just around the corner [Music] hello welcome back to the channel if you’re new to town my name is Jimmy and on this channel we talk about trading in the stock market PayPal is a company that enables digital and mobile payments on behalf of customers and merchants worldwide for most of us they just offer a safe and secure way to shop online now here’s my issue with PayPal they revealed any regulatory filing that they expect to have a pre-tax loss of two hundred and twenty eight million dollars as a result of two specific strategic investments now the first investment they made is in uber technologies which is down about 34 percent and the second is in Latin American online retailer name Mercado Libre Inc which is down about 10 percent now The Associated impact on earnings per share is a negative about 15 cents now PayPal is currently trading at a level that it hasn’t seen since March of this year and this has made it super attractive to me personally now despite these losses I want to share with you the three reasons that I love this stock and why I’m gonna start nibbling shares number one they have an amazing balance sheet which includes a 22 percent debt to cash ratio as well as five billion dollars of cash on hand as they are a profitable company number two they’re showing great growth new accounts have grown by 17 percent and they’re noticing increased activity in their pre-existing accounts and their overall payment volume is up 26 percent now PayPal has also established some business relationships with some big companies like uber and GrubHub now if you’re worried about PayPal’s exposure to Facebook’s Libra cryptocurrency don’t because they recently pulled out of the Libra project due to governmental pressure PayPal recently settled near $100 per share and price hasn’t been this low since last March the one thing you need to be aware of is PayPal has earnings coming up on October 23rd and I anticipate an overreaction to the downside due to the news surrounding the 228 million dollar pre-tax investment loss so my plan moving forward is to begin selling put options to gain an initial position on PayPal following earnings and then continue nibbling shares on future dips in price action now remember don’t trade based on my opinions do your own due diligence before you invest in any of these stocks these are just my investment plans so with that let’s jump into the charts and let’s take a peek at some technical levels okay I’ve got the weekly chart up here on PayPal and I just wanted to start off by showing you some technical levels and then I want to blend in some information from TD Ameritrade website on PayPal and just continue to talk about my plans for it and why I like it so first of all if we now move from more news based information and fundamentals into technical analysis we can see in here that PayPal had a really nice run up to here up to about 120 148 then we got a sharp pull back and you can see if I hover these earnings down here we’ve got an actual beat on earnings but they did have a drop a pullback to the upside and then a continued drop here so on the weekly chart what I’m liking right now is that we are right back down to the 50-day simple moving average which is this red line you can see in here we touched it a bunch of times and it’s sort of respected that level and then moved away from and we continued to the upside you can see back here as well we respected the 50-day simple moving average and PayPal did IPO back here in early July of 2015 so you can see the 200 a simple moving average has just begun right here showing an uptrend which is a good sign but kind of began back in April 29th of this year they were able to finally start showing this on the chart so we’ve got some information right in here and let’s zoom in just a tiny bit and you can see we’ve had some increased volume with some of these sell offs but like I said now on the weekly chart one thing I’m hiking is we had the pullback but we’re also getting the MACD pushing down into the red and in videos prior to this I’ll link a video up here just click this car if you want to check it out but it’s a video where I talked about the MACD and how I pick stocks with expansion to the downside you typically get some reversion to the mean and that means reversion back to this line so we get a push down to the downside we expand the MACD on the red side and then at some point like it did back here we get a little reversion back to the mean and then typically a little follow-through to the green side it doesn’t mean it has to happen it’s just something that I like to see and that’s sort of guides in my trades because usually we get a reversion back to the mean so right now we’re expanded to the downside because of this pullback we’re right down near $100 and this is something else I want to talk to you about so this is a super important point the $100 level is a big psychological support level there are psychological price related levels in charts typically whole dollars half dollars big whole dollars like hundred fifty like 10 20 30 40 50 multiples of 10 are big multiples of our hundred are big 100 200 300 so when you have a stock that has multiples of three digit numbers a hundred is a very significant psychological support level that we have to pay attention to and we just happen to be right down near that level so we’re expanded to the downside on the MACD we’re pushed down into the 50 simple moving average we’re at a psychological support level and now I’m going to flip over to the daily chart so we can talk about it a little bit all this just looks really good to me and you can see on the daily chart as well we got a push back down and on the 200-day simple moving average on the daily chart you can see we’re up trending which I like to see we’re getting this red MACD activity down here and now I want to see a reversion back to the mean and a move to the upside we’re off our all-time highs of a hundred and twenty one dollars and 48 since so all good things are happening right now and then we have earnings coming up on October 23rd so here’s the complicated thing about PayPal it has earnings on 10:23 but it just came out with this news about the 228 million dollar tax loss the pre-tax loss they’re going to take because of their two investments that have declined in value now those investments might very well come back so it’s not a huge issue it’s just the market will likely overreact to it and when we take that information into an earnings report that creates uncertainty and I think the markets are not going to like that so what I anticipate happening is we’re coming into earnings on the 23rd the markets are not gonna like the 228 million dollar pre-tax loss that they’re gonna reveal or or show again it’s already been revealed I think the markets are gonna hammer it for a few days and then once we start to see a return a slowdown and a return back to the upside that’s when I want to be getting long and the way I’m going to approach this and I’m gonna actually flip over here real quick to PayPal this is the options chain and what I’m gonna do is once we get to the point where earnings are done we’ve been hammered for a couple days because of the tax loss I’m gonna come in here and I’m gonna start looking for selling premium opportunities I want to go ahead and sell a put on PayPal at a level that will get me some good premium but that’s also close enough to a level that I’m comfortable with that I’m okay if I get exercised and get assigned those shares and have to buy them because I want PayPal at this level I use selling puts as a strategic way to get good positions in stocks that I do want to hold for the long term so when I’m trying to invest in a stock like PayPal because the fundamentals make sense because the balance sheet looks good the technical levels look good and the news is doing what it’s doing and I’m ok with it all then I’ll go ahead and sell a put with the hopes of a little dip so that I can get exercise shares and then I will have those shares moving forward now here’s the update Ameritrade no longer charges any trade fees for stocks ETFs or options and there are no more assignment fees so if I get assigned shares I don’t have to pay the previous $17 assignment fee that’s gone the only thing I’m gonna pay is 65 cents for each contract that I go ahead and choose to sell put on and if I’m just gonna sell one or two right now that’s only gonna be either 65 cents or a dollar 30 so either way I’m okay with that that’s a really inexpensive to be able to get a good position in a stock like PayPal so really quick let’s jump over I’m just gonna bring up TD Ameritrade platform here their online platform you can log into and do stock research you can see I’ve got PayPal up and I just wanted to come through here and just show you what they’ve got going on so they have a nice set up here where you can open up these you can toggle open this liabilities columns and if you come down right here to total debt you can see over here their total debt is at 1998 and it’s in millions okay now we take that number total debt of almost two thousand and we come up here to assets and we look at their cash cash and short-term investments nine thousand one hundred and nine so like I said in the intro twenty two percent debt to cash ratio which I really like that’s really appealing to me I would call this a B b-plus balance sheet in terms of assets and vs. debt now the other encouraging thing is some people say well okay cash and short-term investments but what if their short-term investments you know what if that money’s really tied up not for the long haul but for the near future then I say okay well let’s look at that you know is the short-term investment level is it overwhelming their cash if you look here no one thousand five hundred and thirty four million on the on their short term investments but if you look at just their straight cash it’s seven thousand five hundred and seventy five million or seven point five seventy-five billion dollars in cash now that’s seven point five seven five billion if you come back to their debt you’ll see really quickly that of all their debt they have here they could pay that all down in a second with the amount of cash they have on hand so tons of cash is a really great sign for a stock like PayPal now if we go into the valuation tab this is another area I wanted to look at real quick you can see their p/e ratio when you initially see their p/e ratio it’s about 48 48 times okay now if you look at the industry it’s thirty three point eight one time so PayPal is a little more expensive than the industry but we’ve just had this big pullback and with the earnings and the anticipated downside after earnings I think that PayPal’s p/e ratio is going to be looking more comparable or at least closer to the industry average you can see price to sales PayPal’s a little better position than the industry price-to-book also a little better than the industry and then PEG ratio I haven’t really been looking at that as much so that kind of gives you an idea for p/e price to sales and price to book now in terms of a dividend they don’t have a dividend at this point if we go back to fundamentals we can kind of take a look down here and you can see financial statements at a glance you can see cash flow improving over the years at 2018 being the highest so far income continual growth in income and the overall balance sheet cash and short-term investments every single year shows an improvement so really positive things for PayPal so again the plan moving forward is just to go ahead and sit tight let it go through earnings see what happens after earnings I anticipated getting beat up a little bit and then I’m gonna look to sell puts so that I can jump in and hopefully get a long position all right as well let me know in the comments below if you currently own PayPal and if so how long have you held the position and if you found this video helpful hit that like button if you’re a first-timer here on the channel consider subscribing and joining our team and we’ll see you tomorrow you [Music]

7 thoughts on “$228 million dollar loss for PayPal!”

  1. I have been out of PYPL for a while now. I thought it may have been getting ahead of itself around $120.00 a few months ago. But I made a lot of money swing trading it the last two years.

  2. Great video! Im still keeping track of ugaz. I noticed AAL last month. The pattern seemed predictable for a swing, the profit/margin is very good and it doesnt take long to hit it. Its always better to swing these types of stocks especially when the company is good, patterns are predictable and gotta have that nice margin/profit…However lets all keep in mind to wait for confirmation. Patterns tend to repeat but don't have to. Happy trading to all and again good video.

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