The hedge fund Elliott Management is said to have taken a stake in the e-commerce company PayPal Holdings (PYPL). PYPL shares jumped on Wednesday on the news when an analyst speculated on a merger with Pinterest (PINS) may be in the works.
Elliott Management could be a major shareholder in PayPal, according to a Wall Street Journal report late Tuesday.
At CFRA Research, analyst David Holt said Elliott, an activist investor, may push for a merger with social media firm Pinterest. PayPal suspended merger talks with Pinterest in 2021.
Pinterest recently hired former PayPal CEO Bill Ready as CEO. Most recently, Ready was a senior manager in Alphabet (GOOGL).
Pinterest has a new CEO
“We suspect (Elliott Management’s) interest in PYPL may be to revive the potential for a tie-up with Pinterest after (PayPal) scrapped plans in October 2021,” Holt said. “As a reminder, Elliott also acquired a 9% stake in PINS earlier in July 2022 and (Pinterest) named Bill Ready as CEO, who served as CEO of PayPal from 2013 to 2019.”
Holt added: “Mr. Ready’s extensive background in one of the highest growing areas at PayPal (Braintree) could come in handy as the company seeks to protect shares in its core payment services business. Similarly, we note that both companies’ financial positions remain attractive. for strategic activities, with clean balance sheets and cost structures ready to be the right size.”
PayPal stock jumped 12.2% to close at 86.42 on the stock market today. Pinterest made a similar jump, rising 11.3% to close at 19.20.
Pinterest reports earnings on August 1st. Earnings for PayPal shares are due on August 2nd.
San Jose, Calif.-based PayPal in February abandoned five-year financial goals. In May, PayPal lowered its 2022 guidance for earnings per share, revenue and total payment volume.
PayPal stock plummets in 2022
For 2022, PayPal estimates revenue growth in a range of 11% to 13% compared to previous predictions of 15% to 17% growth.
PYPL stock had retreated 59% in 2022 by Tuesday’s close. PayPal still has a market value of over $89 billion.
Former parent eBay (EBAY), which spun off PayPal in 2015, has moved payment processing from PayPal to Netherlands-based Adyen.
PayPal stock has a relative strength rating of just 4 out of a possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cyber security and cloud computing.
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