PayPal Prepares for Second-Quarter Results Amidst Market Volatility

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PayPal Holdings, Inc. (PYPL) started the day on a flat note on Wednesday before experiencing a decline in lower-than-average volume. The company is poised to unveil its second-quarter financial results post-market close.

Market analysts anticipate PayPal to declare earnings per share of $1.23 alongside revenues of $7.38 billion for the quarter ending on September 30.

Yesterday, Wells Fargo’s analyst Andrew Bauch initiated coverage on PayPal, assigning an Equal-Weight rating and setting a price target of $55. Trust Securities’ analyst Andrew Jeffrey, on the other hand, upheld a Buy rating but lowered the price target from $85 to $70.

Following PayPal’s second-quarter earnings report on August 2, the stock witnessed a significant 12.32% drop the subsequent day, prolonging its downward trajectory and reaching a low of $50.25 on October 27.

From a technical standpoint, PayPal appears bearish ahead of the impending announcement, marked by a downtrend and a possible formation of a bear flag pattern. Notably, retaining a stock position during earnings announcements can be speculative, as market reactions tend to vary even in the face of earnings hits or misses.

Analyzing the PayPal chart, the stock’s potential bear flag emerged between October 17 and the present day, with the downward-sloping pole materializing in the initial nine-day phase and the subsequent flag formation. If the stock breaches the flag on increased volume, the estimated downward move could amount to approximately 12.7%, suggesting a potential drop toward the $45 mark.

PayPal remains entrenched in a persistent downtrend, marked by a series of successively lower highs and lower lows. The most recent lower high was recorded on October 24 at $54.61, while the latest lower low occurred at $50.25 on October 27.

Today, PayPal attempted to surpass the eight-day exponential moving average but was unsuccessful. A bullish response to the impending earnings release, leading to a surge above this level, could negate the bear flag pattern.

Conversely, if PayPal’s earnings trigger a bearish reaction, resulting in a dip below the October 27 low, the ongoing downtrend will be reinforced, potentially accelerating selling pressure.

Key resistance levels for PayPal lie at $55.86 and $59.32, while support levels are situated at $50.25 and $43.80.