Shares of fintech company PayPal Holdings (NASDAQ:PYPL) haven't been this low since November of last year. The stock tanked after releasing its latest quarterly results and issuing a disappointing forecast for next year. Although the company projects that its top line will rise by 18% to $30 billion for 2022, it's noticeably lower than the $31.6 billion that analysts were expecting. With the economy facing challenges due to inflation and labour shortages, that could spell trouble for the merchants who PayPal to accept payments.
The stock closed at just over $208 last week but there may still be reason to buy the stock. Although several brokerages downgraded their price targets for PayPal, most still have price targets set at well over $250. If PayPal's stock were to hit that level, that would be a return of at around 20% from where it finished on Friday. And there's also a reason to stay bullish on the company that it could surprise next year as it PayPal announced that Venmo users will be able to use their accounts when shopping on Amazon (NASDAQ:AMZN).
If it's one thing the pandemic has shown to investors, is how difficult and unpredictable it can be to make a forecast in this ever-changing environment. PayPal's business may have fallen short of analyst expectations this time around but its business remains sound and the stock may still generate great long-term returns. Buying now, while all the brokerages are down on it, could make PayPal an attractive contrarian stock to hold in your portfolio.
