The PayPal stock price crashed hard last week after media reports said that the company was considering acquiring Pinterest. The stock declined in the past three straight days. It has fallen by more than 10% since Wednesday. However, the PYPL stock is set to have a comeback after the company denied the rumours.
PayPal and Pinterest merger
In a report last week, Bloomberg reported that PayPal was in advanced talks to acquire Pinterest for about $40 billion. That would have been the biggest merger and acquisition deal this year. It would also have been the biggest deal that PayPal has ever done.
The PayPal stock price tumbled sharply after the deal was announced while Pinterest surged. The price action happened because investors felt that the deal was not making sense. For one, PayPal and Pinterest have different business models. PayPal makes money by processing payments while Pinterest is an advertising business.
At the same time, analysts believed that PayPal was overpaying for the company. Besides, it went public at a valuation of more than $10 billion.
Still, some analysts saw some positives for the deal since it would have exposed the company to the fast-rising social commerce business. Indeed, many social media companies like Facebook and Twitter are currently investing in fintech solutions. Twitter has made it possible for people two tip using Bitcoin.
The PayPal stock price is rising in premarket trading after PayPal announced that it was no longer pursuing Pinterest.
Still, analysts believe that PayPal could boost its growth by acquiring other companies. An analyst recommended that the firm should buy SoFi, a company that is valued at about $16 billion. The company offers loans and the ability to trade stocks in its ecosystem.
Another notable company would be Toast, which went public recently and is valued at $24 billion. Also, the company could acquire a company in the cryptocurrency industry.
PayPal stock price forecast
The four-hour chart shows that the PayPal stock price crashed hard last week after the rumours of Pinterest surfaced. Today, the situation has changed and the stock has jumped sharply in the premarket session. The stock has moved above the key resistance level at $251, which was the lowest level on October 4th. It has also moved to the 25-day and 50-day moving averages.
Therefore, there is a likelihood that the PayPal stock will keep rising as bulls target the key resistance level at $266. The next key catalyst for the stock will be its upcoming earnings.
