Why Is PYPL Stock Surging Nearly 15% Overnight?

• According to a Reuters report, Stripe and  Advent ​International have made an offer to jointly acquire PayPal for $60.50 per share.
• The proposed transaction would result in Stripe ​and Advent jointly owning PayPal, with an equal stake each. 
• The deal is also backed by about $50 billion in committed financing ​from banks. 

Shares of PayPal Holdings Inc. (PYPL) surged nearly 15% higher in the overnight session late Tuesday after a report that private payments company Stripe and equity firm Advent ​International have made an offer to jointly acquire the firm. 

According to a Reuters report citing people familiar with the matter, the deal offers the payments company $60.50 per share, a premium of about 28% over its last closing price. 

The deal values PayPal at over $53 billion, as per the report. 

The news comes as markets have been speculating about a PayPal acquisition since the beginning of this year, especially after the company reorganized to separate Venmo, its payments app, from its other operations.

Deal Contours

Reuters said that Stripe and Advent submitted the offer earlier this month. The deal is also backed by about $50 billion in committed financing ​from banks. 

The proposed transaction would result in Stripe ​and Advent jointly owning PayPal, with an equal stake each. It will not involve splitting the company, as per the people cited in the report. 

The two companies also made an initial offer in early April, according to the report, which added that PayPal has yet to respond to the offer. However, Stripe and Advent are looking to close an ⁠agreement by the end of the month, the report said. 

The people cited in the report also added that there was no guarantee that the proposal to PayPal would result in a transaction. Stripe, Advent, and PayPal have not yet commented on the deal, as per Reuters. 

PYPL Stock: What’s Retail Saying?

On Stocktwits, retail sentiment around PYPL stock was ‘bullish’ at the time of writing, amid ‘high’ message volumes. The ticker was also among the top trending on the platform. 

However, several messages indicated that even optimistic traders believe the current offer undervalues the company. 

“There’s a giant gap between $82-86. That’s a nice offer for a buyout, not just $60… I’ll wait and see how it plays out,” said one bullish user.

Another user called the offer “dumb,” adding that there was a “zero percent chance of a sale to Stripe for $53B” given its strong free cash flow. 

Yet another said, “Regardless if they get bought or not, another accumulation week is upon the stock.”

PYPL stock has lost more than 18% of its value year-to-date. 

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