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PayPal stock price has remained in a tight range in the past few months as investors waited for the upcoming earnings, which will provide more information about its growth trajectory. This article provides a PYPL stock forecast as its PYUSD stablecoin assets surge ahead of earnings.
PYUSD Assets are Soaring Ahead of Earnings
The stablecoin industry is doing well this year, with its assets soaring to over $304 billion and analysts predicting more growth after Donald Trump signed the GENIUS Bill into law.
PayPal has become a major beneficiary of this growth, as assets in PYUSD, its stablecoin, have increased. Data compiled by Artemis shows that the supply has increased by 52% over the last 30 days to exceed $2.8 billion. This is a notable increase since the stablecoin had less than $1 billion in assets a few months ago.
The rising PYUSD assets is a good thing for PayPal because it means that it will start making some money by investing these assets in short-term government bonds.
In its case, assuming that it invests all the funds, and that the short-term yields are 4%, the company can make about $112 million a year.
Still, other PYUSD metrics are not encouraging. For example, the number of addresses holding it has plunged by 79% in the last 30 days to 87.5k, while the number of transactions and volume plunged by 44% to 2 million and 34% to $23 billion, respectively.
The other major risk for PayPal in terms of stablecoins is that their popularity may hurt its business over time. That’s because its flagship wallet and its unbranded platforms charge at least 2% of the volume per transaction. In contrast, stablecoin transactions are almost free.
For example, sending $ 1,000 to a user through PayPal and using a debit or credit card costs approximately $30, whereas a similar transaction using stablecoins incurs almost no additional cost. So major retailers and fintech compnies have considered using stablecoins for payment processing.
PayPal Earnings Preview
The next important catalyst for PayPal’s stock price will be its third-quarter earnings, scheduled for release next Tuesday, which will provide further insight into its growth.
The most recent results showed that its net revenue increased by 5% in the second quarter to $8.3 billion, as total payment volume rose by 6% to $443 billion.
It ended the last quarter with over $13.7 billion in cash and short-term investments and $11.5 billion in debt. It then continued repurchasing its shares, bringing the trailing twelve-month figure to $6 billion.
Data compiled by Yahoo Finance shows that analysts expect its third-quarter revenue to be $8.23 billion this year, up 4.92% from the same period last year. Its earnings per share are expected to remain intact at $ 1.20.
The report shows the average estimate is that its full-year revenue rose by 4.15% to $33.12 billion this year.
Most analysts expect the PayPal stock price will rise to $81.85, up from the current $69. Some of the most bullish analysts are from companies like JMP Securities, JPMorgan, Citi, and Barclays.
PayPal Stock Price Technical Analysis
The weekly chart shows that the PYPL stock price has remained inside a three-year consolidation. It found strong support at $53.20 and resistance at $100 during this period.
As a result, the Average Directional Index (ADX), one of the most popular volatility indicators, has dropped to 14.75, its lowest level since September last year, indicating a lack of volatility. It is also oscillating at the 50-week and 100-week Exponential Moving Averages.
Most notably, this price action indicates that it is in the accumulation phase of the Wyckoff Theory. This phase is usually followed by the markup phase, where an asset experiences a significant increase in value.
Therefore, there is a small chance that the stock will experience a parabolic rise soon, and the upcoming earnings could serve as the catalyst for this. A rebound may cause it to jump to the key resistance level at $100, representing a 45% increase from the current level.
