PYPL Stock Jumps 4% — PayPal’s $60.50 Buyout Offer Has Wall Street And Retail On The Same Side

• Cantor Fitzgerald said a $70 per share offer would better reflect PayPal’s intrinsic value.
• Canaccord called the reported $60-$61 takeout price too low.
• Stocktwits sentiment was ‘extremely bullish,’ with many retail traders expecting a higher bid to emerge.

PayPal (PYPL) is drawing support from both Wall Street analysts and retail investors following the reported $53.4-billion takeover bid from Stripe and Advent International. Both groups say the $60.50-per-share offer undervalues the payments company.

Shares of PYPL gained nearly 4% on Thursday after the stock logged its best day ever on July 15 following reports of the potential take-private deal.

At the time of writing on Thursday afternoon, PYPL shares had pared some of their gains but remained up 3%. 

PYPL Is Worth $70 A Share, Says Cantor Fitzgerald

Cantor Fitzgerald analyst Ramsey El-Assal said a sum-of-the-parts analysis suggests a $70 per share offer would better reflect the company's intrinsic value, according to TheFly. While maintaining a ‘Neutral’ rating and a $54 price target, the firm said the reported valuation is likely an opening bid rather than a final proposal. Cantor Fitzgerald’s price target implies a downside of nearly 3% from the stock’s Wednesday close. 

Canaccord Says $60-$61 Takeout Price Is Too Low

Canaccord analyst Joseph Vafi raised the firm's price target to $55 from $42 and maintained a ‘Hold’ rating. The firm said a $60-$61 takeout price appears too low, particularly with both financial and strategic buyers involved. The firm added that PayPal's board is likely focused on operational improvements under its new CEO rather than strategic alternatives, according to TheFly. Cantor Fitzgerald’s price target implies a downside of nearly 1% from the stock’s last close. 

Clear Street Sees Hidden Value In PayPal

Clear Street initiated coverage of PayPal with a ‘Hold’ rating and a $61 price target, implying an upside of nearly 10% from its last close. The firm described the company as being at a “strategic crossroads,” with hidden value obscured by its complex organizational structure. The firm said the company’s restructuring gives management another opportunity to unlock that value.

Barclays also upgraded PayPal to ‘Equal Weight’ from ‘Underweight’ with a $55 price target. 

The $53B Takeover Bid

Stripe and Advent International made a joint $53.4 billion cash offer, or $60.50 per share, for PayPal on July 15, according to CNBC. Stripe, Advent and Block are reportedly contributing $17 billion in equity toward the transaction, while the bid is backed by roughly $50 billion in committed bank financing. PayPal’s board is expected to meet as soon as July 20 to discuss the proposal.

PYPL Stock: Retail Traders Expect A Higher Bid

On Stocktwits, retail sentiment toward PayPal was ‘extremely bullish,’ while message volume was ‘extremely high’ at the time of writing.

Many traders dismissed the reported offer as too low for a high-cash-flow fintech company.

One retail trader suggested that the bid significantly undervalues PayPal, saying that “anything under $80 is a scam.”

Another bullish trader described the “$60.50/share” offer as “just the beginning of negotiations,” adding that it would “easily get bid up to $75.”

One more retail trader said, “any price below $100 is a steal,” and added that Stripe wants PayPal “because they know that.”

PYPL shares have declined around 4% year-to-date.

Also See: AVAV Stock Has Slumped Over 40% YTD — Why Raymond James Thinks This Beaten-Down Drone Stock Can Soar 49%

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