Our Paypal $PYPL Position: Will the take over happen?
Doesn't Matter!
DOESN’T MATTER!
After the earnings dip on February 3 from PayPal, we accumulated shares at an average price of 42.75. When price broke lower, we also added short term February calls for pennies, which did not work out. We then added March out of the money calls, positioning for a technical rebound back above 49 even without any major catalyst. Those March contracts are now moving up multifold. The setup was primarily technical, based on positioning, timing cycles, and price structure. The recent takeover narrative is simply accelerating attention toward valuation rather than creating the move itself.
The key near term level remains 49, which previously saw heavy accumulation. Price naturally tends to revisit major liquidity zones like this. If momentum carries into that level, narratives can easily fuel continuation while price works through supply. Above that sits the post earnings gap near 52, which is another logical magnet that often gets filled once momentum builds. These are mechanical market behaviors that frequently occur regardless of headline driven excitement.
The takeover discussion itself may or may not lead anywhere meaningful. Large acquisitions in financial infrastructure face intense regulatory scrutiny across multiple jurisdictions. Antitrust review alone can delay or block transactions depending on the identity of the buyer. Financing a deal of this size is also complex, especially in a higher rate environment where capital is more expensive. Many reported situations begin as exploratory conversations and never develop into formal offers.
Even when strategic interest is real, buyers often walk away after deeper due diligence. Growth trajectory, competitive pressure from alternative payment platforms, integration challenges, and capital allocation priorities can all shift the decision. A full acquisition is a long legal and regulatory process that can take many months or even years to complete if it happens at all.
Regardless of the outcome, current positioning looks very favorable. Based on earnings power and typical valuation ranges, the stock should reasonably trade in the 52 to 62 range at least once this year. Stronger sentiment or sustained re rating could push price into the 70s. None of that requires a completed buyout, only normalization in valuation and continued momentum.
If a real acquisition process develops, price will likely move up, pull back, and consolidate repeatedly while approvals and negotiations unfold. Because of the long legal framework involved, waiting for a final takeover outcome is not necessary for strong returns. The plan is to take profit well before any potential completion. The opportunity here is the valuation gap and technical rebound. The takeover narrative simply expands the upside range while that original thesis continues to play out.
But if the take over does happen fast with the help of greasing Trump administration, then its still win win situation for our Position.
Be sure to read our previous articles that has no paywall:
Our portfolios have been stagnant since the October peak, with market price action remaining range-bound. However, things should get very exciting soon now that February Opex is out of the way. We will attempt to break above the October peak before the end of this quarter and position ourselves to move much higher in Q2. All positions will be shared in real time in the subscriber chat, and we maintain a complete transaction history of every entry since inception.