PayPal Stock Hit with "Sell" Rating

There's been a slight increase in put buying recently

by Josh Selway

Published on Jul 29, 2019 at 9:05 AM

PayPal Holdings Inc (NASDAQ:PYPL) shares have gained over 37% in 2019 and hit an all-time high of $121.48 last week before a disappointing earnings update sparked a small bear gap for the payments stock. More specifically, the company issued a downbeat sales outlook for the rest of the year, which is one reason Guggenheim just came in and downgraded its opinion on PYPL to "sell" from "neutral." The brokerage firm also called out the company's split from eBay and Brexit headwinds as reasons to avoid the equity.

This marks the first "sell" recommendation on the Street for PayPal, with the vast majority of analysts recommending to buy the shares. However, pessimism has started to pick up some on other fronts, too. Short interest increased 15.7% in the last two reporting periods, and though just 1.4% of the float is dedicated to short interest right now, this could suggest there's room for more bears to pile on.

In the options pits, PYPL has a 10-day put/call volume ratio of 0.56 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This shows that call buying has easily surpassed put buying in the past 10 days. However, this reading's annual percentile rank is 88, meaning there's actually an uptick in put buying relative to call buying in recent weeks. Still, peak front-month open interest in the August series sits at the 130 call.

Bears and bulls will both be watching closely, as PayPal stock is set for a 1.7% decline at the open. This move would have it closing below the 50-day moving average for just the fourth time in 2019, while the 200-day moving average sits all the way down at the $98 area.

 

 


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