PayPal stocks surged to a near six-month high on Wednesday after Stripe and private equity firm Advent International offered $60.50 per share to acquire the company. PYPL shares jumped as much as 18% in midday trade on Wednesday, marking highs last seen in January. Wall Street analysts remain divided on the $53 billion takeover proposal, with BTIG stating the board would consider the offer seriously due to uncertainty around the stock, while William Blair suggested the bid may undervalue PayPal and called it a potential low-ball offer.
Wall Street Analysts Issue Divided Ratings on PayPal Takeover Bid
BTIG maintained a Neutral rating on PayPal stock and told clients the board will consider the offer seriously, citing what it called a "significant state of uncertainty" hanging over the stock. William Blair, which has a Market Perform rating, stated it is "hesitant to chase" the rally and noted that new CEO Enrique Lores may not accept without pushing back.
Jefferies, which has a Hold rating, stated that a combined Stripe-PayPal would primarily target consumer payments rather than merchant processing. Analyst Trevor Williams said the tie-up would be roughly "neutral" for Adyen.
William Blair stated that Stripe and Advent could go as high as $70 per share if pressed, though it puts a low probability on that happening. BTIG called the offer a "lifeline worth taking."
PYPL Stock Jumps 18% in Midday Trade on Wednesday
PYPL stock jumped as much as 18% in midday trade on Wednesday, marking highs last seen in January. The stock was among the top trending tickers on Stocktwits at the time of writing. Retail sentiment around the shares improved to "extremely bullish" from "bullish" territory over the past day, while chatter climbed to "extremely high" from "high" levels.
Stocktwits data showed message volume around PYPL stock more than doubled in the last 24 hours.
PayPal Replaced CEO Alex Chriss with Enrique Lores on February 3
PayPal fired CEO Alex Chriss on February 3, replacing him with former HP chief Enrique Lores. The leadership change occurred the same day PayPal issued new profit guidance that was weaker than what Wall Street expected.
Michael Burry Estimates PayPal Intrinsic Value Between $75-$115 Per Share
Michael Burry, the investor known for his bet against subprime mortgages before the 2008 crash, stated he is not buying more PayPal shares, calling the buyout offer "simply too low." Burry estimated that PayPal's intrinsic value should be between $75 and $115 per share under different valuation scenarios, with his preferred estimate near $100. He stated he believes the proposal is only an opening bid and expects the buyers to raise their offer.
FAQ
What price did Stripe and Advent International offer for PayPal stocks?
Stripe and Advent International offered $60.50 per share to acquire PayPal.
How much did PYPL stock increase on Wednesday?
PYPL stock jumped as much as 18% in midday trade on Wednesday, reaching a near six-month high last seen in January.
What is Michael Burry's valuation estimate for PayPal stocks?
Michael Burry estimated PayPal's intrinsic value should be between $75 and $115 per share under different valuation scenarios, with his preferred estimate near $100.
