Top-level corporate insiders tend to have a good understanding of their companies’ prospects. If they’re buying company stock, it’s a sign that they’re confident about the future and that they expect to see share price upside.
In this report, we are going to highlight some interesting insider buying at PayPal Holdings Inc (PYPL:US). PayPal is a leading global FinTech company that enables digital and mobile payments on behalf of consumers and merchants. The group, which operates in more than 200 markets, has over 400 million users across its platforms. The company is listed on the Nasdaq Global Select Market and currently has a market capitalization of $242 billion.
PayPal Holdings Inc: Insider Buying
Our insider transaction data shows that on November 9, PayPal’s Chairman John Donahoe bought 9,780 PYPL shares at a price of $204.42 per share. This trade cost the insider just under $2 million and increased his holding to 67,750 shares.
This trade is worth highlighting due to the fact that insider purchases at PayPal are quite uncommon. Our data shows that this is only the third buy from an insider since the company’s spinoff from eBay in 2015. The fact that Mr. Donahoe – who has served as Chair since 2015 – has chosen to spend nearly $2 million on the stock after a recent share price pullback suggests that he sees a lot of value in the stock right now. It’s worth pointing out that he has increased the size of his position by around 17% with this trade, which is a significant increase.
Share Price Weakness
PayPal’s recent third-quarter results showed that the company is still growing at a healthy rate.
For the quarter, revenue amounted to $6.18 billion (slightly below analysts’ forecast of $6.23 billion), up 13% year-on-year, while total payment volume (TPV) came in at $310 billion, up 24% on an FX-neutral basis. Non-GAAP earnings per share were $1.11 compared to $1.07 in Q3 2020, while free cash flow was $1.29 billion, up 20% year on year.
Looking ahead, PayPal said that it expects revenue and EPS to grow by around 18% and 19% respectively for the full 2021 year. It also advised that it expects to end the year with more than 430 million active accounts.
The market was unimpressed with these numbers, however, with the share price falling around 10% to the $205 level after the results were published. It’s worth noting that only a few months ago, PayPal shares were trading above $300.
The purchase from the Chairman here suggests that he expects the stock to bounce back. Given the size of the insider purchase, we see it as a bullish indicator.