Investing Club: Goldman Sachs' call on embattled Club stock PayPal is a game changer

Published Wed, Mar 30 20221:19 PM EDT

Kevin Stankiewicz @in/kevinstankiewicz @kevin_stank

Finally, some good news for troubled Club name PayPal (PYPL). Goldman Sachs initiated coverage of the fintech company with a buy rating Wednesday morning. We've not been shy in admitting this stock has been a disaster for us in recent months, but we're reaching an important moment in PayPal's recovery. The stock is up more than 29% since closing at $93.61 on March 7, and Goldman's buy call is another gust of wind in PayPal's sails. We intend to stay aboard. Cramer's take On Wednesday's Morning Meeting, Jim Cramer said Goldman's note is "game changing" for PayPal. Cramer explained: "We've been very concerned that PayPal would not return to its old 20% growth rate after this year. The fact that Goldman Sachs said it would happen restored some faith that I had lost after the company told me last year that things were running better than analysts thought. That's a clarion call for a return to its once hallowed status, the status that helped bring us into the company." More broadly, Goldman's note may be a sign that Wall Street is turning more positive on PayPal, which fell nearly 70% from its record close of $308.53 on July 23 to its 52-week closing low on March 7. That's a brutal, brutal decline due both to PayPal's own execution problems and the macro environment turning less favorable to high-multiple technology stocks. Whatever the cause, it's still painful for shareholders who have been along for the slide. At this point, however, we plan to hold onto our remaining shares of PayPal — 550 in total, with a 1.92% weighting in the portfolio. Our average cost basis is $225.26. Investors appear to believe PayPal is no longer a falling knife. While we maintain a 2 rating on the stock, meaning we'd be buyers on a pullback, we think signs of a durable bottom look clear. We continue to need redemption from PayPal management. Our trust in their forecasting ability has been shaken since CEO Dan Schulman's optimistic November interview on "Mad Money" has been followed by disappointments. Reminder: Our sale of 100 PayPal shares on Tuesday was strictly to raise