Market Direction and Stock Trends

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Big Money Sheds PayPal (PYPL), Should You?
By: Jason Bodner | December 21, 2021

• PayPal Holdings, Inc. (PYPL) stock has slumped in 2021, declining -22.0%.

The digital payments company pulled back with the weakness in growth stocks. But another likely reason is Big Money dropping the stock.

So, what’s Big Money? Said simply, that’s when a stock goes down in price alongside chunky volumes. It’s indicative of institutions selling the shares.

Smart money managers are always looking for the next hot stock. And PayPal has many fundamental qualities that are attractive. But sometimes when values decline, money managers look to sell or may be forced to liquidate.

This downward movement creates uncertainty for the stock going forward. And as I’ll show you, the Big Money has been exiting the shares recently.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way. But Big Money sells too, especially when the situation changes.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals PYPL has made the last year.

We’ve recently seen Big Money selling activity. Each red bar signals big trading volumes as the stock price dipped:

Source: www.mapsignals.com

In 2021, the stock has attracted 20 Big Money sell signals. Generally speaking, recent red bars could mean more uncertainty is ahead.

Now, let’s check out technical action grabbing my attention:

• 3-month underperformance vs. Invesco QQQ Trust Series 1 (-36.2% vs. QQQ)

Vast underperformance is an obvious red flag for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to understand the fundamental story too. As you can see, PayPal has been growing sales and earnings at a double-digit rate. Take a look:

• 3-year sales growth rate (+18.0%)
• 1-year earnings growth rate (+13.8%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term. But when there is disagreement between the two, it could mean the situation has changed. Or it could be a huge long-term value play on a great stock. In the case of PayPal, investors buying at each red mark prior to this year would have gained big:



In fact, PYPL has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has had buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis. Usually when selling dries up, great stocks rally again.

PYPL has had a lot of qualities that attracted Big Money over the years. Since 2015, it’s made the MAPsignals top list 48 times, with its first appearance on 9/20/2016… and gaining 360.27% since.

Despite the recent decline, long-term investors can consider it a winner. The blue bars below show the times that PayPal was a top pick since 2015:

Source: www.mapsignals.com

It’s been a top stock in the technology sector according to the MAPsignals process. I wouldn’t be surprised if PYPL reappears on this list in the years to come. Let’s tie this all together.

The Bottom Line

The PayPal decline makes the stock look oversold. Big Money selling in the shares is signaling to take notice. Given the historical gains in share price and strong fundamentals, this stock could be a huge value play long-term and still worth a spot in a growth-oriented portfolio.

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