Fallen Angels Can Stay Fallen
PayPal is one of those stocks that was once everybody’s darling. A true Wall Street brand.
But when you look at the chart… it’s a catastrophe.
Over the past five years, $PYPL is down more than 80%. Over ten years, performance is basically flat, with one massive COVID spike in between. For long-term investors, this stock has been a huge disappointment.
Things got so bad that yesterday PayPal didn’t just publish earnings, they also replaced their CEO, Alex Chriss. This is the same guy who said in 2023 that PayPal would “shock the world.”
Well… I’m sure this is not what he meant.
Because his tenure was certainly shocking, just in the sense of erasing billions of dollars in market cap.
So to get to the point: No, I don’t think PayPal is a buy right now.
Yes, it looks cheap with a P/E of around 8. But there are no real signs that the sell-off is over or that PayPal is ready for a sustained comeback. The bottom is not in: $PYPL dropped another 20% last night after the CEO change was announced.
By the way, Chriss will be replaced by Enrique Lores, the CEO of HP. And honestly, I’m not convinced he’s the guy to turn around a payment giant. He does have experience with declining companies though, $HPQ is down about 25% over the past five years.
These kinds of fallen angel stocks are a no-go for me. Not because they can’t recover eventually, but because it usually takes much longer than investors expect, and the opportunity cost is massive.
There are better places for your money than betting on long-term weakness.
Buy strength.
Buy robust growth.
Buy innovation.
Stay away from these hopium stocks like $PYPL.
What’s your take, guys?
