'Big Short' Investor Michael Burry Initiates PYPL Position At $49 — And Says Software Selloff Was Not A TACO Trade

• Burry disclosed a new 3.5% position at around $49, calling the payments firm a top pick in his software-payments universe. 
• Burry said PayPal ranks ahead of Fiserv and Adobe based on stock-based compensation practices. 
• He also pushed back on the idea that the recent decline in software stocks was another Trump “TACO trade” setup, saying the latest weakness was more tied to the credit market than to policy-driven volatility.

Shares of PayPal Holdings, Inc. (PYPL) were back in focus on Thursday after “The Big Short” investor Michael Burry disclosed a new stake in the payments giant and pushed back on the idea that the recent software selloff was just another TACO trade linked to policy reversals by U.S. President Donald Trump.

PYPL stock fell more than 1% in Thursday’s premarket session after ending 3% higher in the previous session, in which it hit its highest level in over two months.

Burry Picks PayPal As Top Software-Payments Bet

Burry said in his latest Substack post that he initiated a 3.5% position in PYPL at $49. He said PayPal ranks ahead of Fiserv and Adobe, near the top of his software-payments universe, based on stock-based compensation practices, accounting for future LLM and agent adoption, and a discounted owners’ earnings valuation.

He added that several names in the space now offer cushion beyond his 15% annualized long-term return target. Burry said he continues to hold positions in Autodesk and Veeva Systems and plans to initiate positions in Salesforce and MSCI, noting that these holdings do not rely on private credit markets for financing exposure.

Software Stocks Hit By Private-Credit Risk, Says Burry

Burry said the recent decline across software stocks reflected a “reflexive positive feedback loop” between falling software equities and changes in the market for their bank debt, pointing to pressure emerging in private-credit markets heavily exposed to software borrowers.

Private credit accounted for 30% of the U.S. leveraged finance market in 2025, and analysts have warned that concentration in software lending could raise default risks as investors reassess AI-driven disruption to legacy business models. Morgan Stanley expects private-credit defaults to reach about 8% between late 2026 and early 2027, led in part by stress in software portfolios.

Still, Burry said those pressures are unlikely to persist. “I do not believe the technical pressures brought on by the private credit/software debt issues are big enough to affect these stocks for much longer,” he said. 

Burry Says Software Drop Wasn’t A ‘TACO Trade’ Setup

Burry also addressed growing investor reliance on the “Trump Always Chickens Out” (TACO) trade, which treats weakness as a buying opportunity in anticipation of policy reversals. But the investor said that the latest software declines were more directly tied to credit-market mechanics than to macro-policy signaling.

“It is rather curious that twice now in the past year, Trump has made the bottom and triggered a rally to new highs by quickly withdrawing the threat that had made the market crash in the first place,” he said. “This is not exactly TACO - Trump Always Chickens Out. There is a rhythm to it that raises a lot of real questions, not the least of which is the existence of a crony capitalism blitzkrieg in the United States.”

Markets have increasingly priced geopolitical escalation through that lens in recent months. During recent tensions involving Iran, equities rebounded quickly as investors anticipated de-escalation even before policy announcements were finalized.

Burry Calls Software Selloff An ‘Impossible AI Narrative’

Burry called the recent selloff part of a broader “software and payments massacre at the hands of an impossible AI narrative,” arguing that concerns about LLM disruption have been overstated for several established platforms.

While he sees some companies facing risks from advanced AI systems for specific reasons related to their business models, Burry does not expect the outcome to affect the firms he selected, following his “forensic, competitive,” and fundamental analysis of their investment potential.

How Do Retail Traders Feel About PYPL?

On Stocktwits, retail sentiment for PYPL jumped to ‘extremely bullish’ from ‘bullish’ levels a day ago amid a 96% jump in message volumes over the past week.

One user noted, “Burry is buying can move today.”

Another user said, “E-commerce grows. Digital wallets win. PayPal is positioned at both ends of the transaction.”

PYPL stock has declined 20% over the past year. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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