Outgoing PayPal CEO's $2M Stock Purchase Suggests the Company Could Be Undervalued, Analysts Say

PayPal Holdings Inc (PYPL:US) CEO Dan Schulman's purchase of about $2 million worth of PayPal stock back in February 2023 attracted investor attention and raised quite a few questions about the company's future performance. Analysts at the firm 2iQ Research noted that it's unusual for outgoing executives to make such purchases, as they typically lay off company stock. Schulman's decision to buy PayPal stock suggested his belief that the company was undervalued back then, according to analysts.

In addition to Schulman's purchase, PayPal back then received notable price target upgrades after the release of its fourth-quarter results. JP Morgan revised its price target from $95 to $103, while Wells Fargo raised its target from $95 to $97. These revisions indicated an increased level of confidence in PayPal's future performance and prospects.

Despite positive developments, PayPal's shares traded 2.5% lower at $73.31 on February 24 afternoon. It's quite important to understand that stock prices can be influenced by various external and internal factors and may not always reflect the underlying value of a company.

As far as financial performance was concerned, PayPal surpassed expectations for the fourth quarter by reporting earnings of $1.24 per share, exceeding the consensus estimate of $1.20 per share. The company also provided an optimistic outlook by forecasting fiscal 2023 earnings of $4.87 per share, which exceeded estimates of $4.75 per share.

CEO Dan Schulman's purchase of shares and the noteworthy price target upgrades indicated a level of confidence in PayPal's future prospects.