Insider Buying: PayPal’s CEO Just Bought $2 Million Worth of Stock

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If a CEO is spending millions of dollars on company stock, it’s often worth taking a closer look. CEOs tend to be way ahead of analysts when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.

In this report, we are going to highlight a large CEO stock purchase at PayPal Holdings Inc (PYPL:US). PayPal is a global FinTech company that enables digital and mobile payments on behalf of consumers and merchants. The company, which operates in more than 200 markets, has over 400 million users across its platforms. It is listed on the Nasdaq and currently has a market capitalization of approximately $85.06 billion.

Insider Buying at PayPal

2iQ data shows that on February 17, PayPal’s CEO Dan Schulman purchased 26,065 PYPL shares at a price of $76.17 per share. This trade cost the insider approximately $2.0 million and increased his holding to 395,351 shares.

Substantial Purchase

What’s interesting about this trade is that Mr. Schulman is set to step down as CEO at the end of 2023. Typically, when top-level insiders are set to step down from their positions, they are net sellers of company stock. The fact that Mr. Schulman is buying company stock suggests that he firmly believes that PayPal is undervalued at present.

It’s also worth noting that the purchase is quite large. This is another indication that Mr. Schulman sees a lot of value in the stock currently.

Earnings Beat

PayPal pleased investors recently when it reported its Q4 earnings. Not only did the company beat earnings estimates ($1.24 per share versus the consensus forecast of $1.20 per share) but it also forecast FY2023 earnings above current estimates ($4.87 per share versus $4.75 per share).

On the back of the better-than-expected Q4 earnings, a number of brokerages raised their price targets for the stock. JP Morgan lifted its price target to $103 from $95 while Wells Fargo raised its price target to $97 from $95. These new price targets imply a substantial share price upside from current levels.

In light of these better-than-expected results and broker price target increases, we see the insider buying here as a bullish signal.