PayPal Might Be Getting Acquired. Here's My Honest Take

PayPal shareholders might actually have an exit strategy. Might not be the best one, but it is an option as of right now. PayPal stock at the time of recording this video is up around 20%. Now, why is that? Well, it's because of this. PayPal jumps 20% in pre-market on report of Stripe Advent $53 billion takeover option. That's around $60.5 per share. Is it enough? Is it not enough? In my opinion, again, this is the first bit, so I don't think it's going to be the last one. If PayPal management do accept this, well, I guess they'll just continue the same trend of disappointing shareholders because I do think that PayPal, if they sell, they should be selling for more than $60 billion, should be selling for more than $70 per share. Are they in a position to negotiate? If if they believe truly that they can turn this around with the cost cuts, with monetization of Venmo, etc., etc., then yes, they should try to get more. Now, the thing with this is quite interesting because this was a headline that was published in February of this year, February 25th. Stripe may be looking to buy PayPal. what it means for the stock. It's not the only one. In April, we had the exact same thing happen, right? PayPal rivals again. Stripe's name was popping up interested in PayPal. So, there's always someone that knows something, right? This is not a coincidence that we've seen this headline pop up in February. It's not a coincidence that we're what we were seeing the same headlines popping up again in April. And it's not a coincidence that we are getting this right now, right? Clearly talks were happening behind the doors for quite a while. And so to me, this is just a first bit that goes public. $53 billion. Yes, it's a premium to where the stock was trading just a day before, right? As you can see right here, we're trading at around $47.40. Seems like we're going to go over the 200 day moving average for the first time in quite a while. That's on the daily. And actually on the weekly, it's also quite bullish for now. We still need to see if it holds because on the weekly, you can see it's going to go over the 50, which is also quite good. Now, the thing here is it's the first bit. Even if they were to accept it, it's going to take a super long time until the acquisition goes through. I do think that if Stripe were public, I think this would have been easier because then you just offer cash and shares, whatever Stripe is valued at, I don't know what what it was last time, 120, $130 billion or so privately. So, right now, this would mean that PayPal goes off the public markets into the hands of Stripe and Advent. And for the people that will ask, oh, what will happen with my shares? What will happen with my options? Well, for the options, it really depends on your strike price, right? If your strike price is above the price that they're going to sell it at, it's very likely that your option, the contract is going to be worthless, right? It's going to expire worthless. Again, it really depends on on the price that you bought it at, when you bought it. So, today, if you own, let's say, $60, it's probably going to be green today. Now, if you just own PayPal shares, it's just the usual process. whenever they get acquired, well, your shares will be sold and you you'll get the cash, right? Again, if it were a publicly traded company, you would be getting shares of Stripe, but unfortunately, Stripe is not public. Now, me personally, what do I think of this? Well, again, first of all, it's right now, right? It's a 56. So even the market even the market at the time of recording this okay it's pre-market might not be convinced that this deal goes through could this deal also or this headline attract others and go into a bidding war it's definitely possible I don't know just speculating will PayPal management accept this offer I think if they accept the first offer it's just them saying you know what we surrender just take it and and do what you think is best with a company which again I think if Stripes buys this because Stripe is putting Stripe and Advent are putting $53 billion here. So if they're willing to pay up $53 billion they're definitely seeing a lot of value to be unlocked. Now of course for a lot of value to be unlocked, you need the right captain for the ship. And as someone who's been following PayPal and has owned PayPal for a while, we know that the captain is quite important now. Alex Chris did what he did. I think he was doing an okay job until well until the end when things literally did not go his way. He hit the iceberg. Maybe didn't call uh for help the right time. I guess we'll never know because he doesn't want to show up on the channel, which okay, fine. But PayPal, again, you have a company that's generating $6 billion in free cash flow virtually, right? No debt. You have Venmo that's extremely valuable. It's probably the the big chunk of the valuation today and monetization has just started. You still have an insane amount of data, right? You still have Brainree, PayPal checkout button. All of that still exists. Still have what 400 million people using it. So there is definitely a lot of value. Now if Stripe comes in and says, you know what, we're willing to pay $53 billion. Maybe they're willing to go all the way to $60 billion. Remains to be seen. It's probably because they know they can unlock an insane amount of value. I am almost certain that if they do acquire PayPal, half of the bloat goes away, right? Cuz let's face it, you don't need especially not if you're Stripe. And then who knows, maybe in a couple of years time, Stripe goes public and you get to own a much better business or a better business that's run by much better people. That's also definitely a possibility. So to me right now with the bull spreads for me the scenario hasn't really changed that much. I don't think my bull spreads are going to go up by quite a lot right now because we're still under uh the 60 or $65. So it doesn't change much. It could actually be quite of a win-win situation. Right? If suddenly the bit does go higher then okay then it's going to be increasing. If he doesn't and if PayPal rejects this offer, then probably the stock goes back down, right? Unless in the next earnings report and call, suddenly things are much better inside of the company, which I I guess I guess we'll wait and see. But from where I stand, I'm not going to touch my bull spreads. If I were to do anything, it would will just be cutting it in half. take the cash and buy Nebulus or SoFi or whatever. But if I had, let's say, shares and I wanted to go out, maybe this is an opportunity to go out. Again, this is just, in my opinion, the first offer, the first bit, it could go higher. It could also be rejected. If I had options and I'm underwater right now, down 80% 90% depending on your strike price, depending on the expiry date, today might actually be not a good day, but a day where you recover some of your losses. If I was in that position, right, if I still had my $70 call options for January 2027, I would probably take whatever is left today, say, "Thank you very much. I'll move it into something that well is going to make me some money, right? Because even if the bid gets a little bit higher, how much more am I going to collect? Because remember, time is not on your side anymore. So even if a higher bid comes in, but it only comes in a month from now, two months from now. Well, during that month or two, your options contract, well, it's going to go down, down, down. So, all in all, this is a good exit for whoever wanted to exit PayPal but didn't want to sell it at 40 bucks, 50 bucks or so, you get to sell it closer to 60 bucks right now. I do certainly hope that management is looking at this and saying, you know what, if you're willing to pay $53 billion, maybe you're willing to pay 60 or maybe you're willing to pay 65, maybe $70 billion. Remains to be seen. But I'm not surprised that this is happening because we've seen the headlines over the last couple of months. And as always, where there is smoke, there is fire. So all in all that those are my thoughts around PayPal right now. It's quite interesting that this comes what literally a couple of weeks before they are going to report their quartigures. So we'll see what happens. We did also have SML's earnings report come out and that was a blowout quarter. Beats across the board. Guidance was raised. So all good on that front. And so what did we get? We get total net sales of 9.3 billion. Estimated number was € 8.85 billion. We have here gross margin 54% beat of the 52% number that the street was looking at. Operating margin 37.1% EPS 7.59. Estimated number was €6.9. So here again beats across the board. extremely extremely good quarter. Fiscal year 2026 guide was released. They're now expecting 43 to 45 billion euros. Previously they were expecting 38 billion 39.3 gross margins 54% to 56%. Prior number was 51 to 53%. Even for Q3 we have now net sales expected between 11 to 12 billion euros. Estimated number was 10.27 27 gross margin 55 to 57% estimated number was 52.5%. What else did they tell us? Well, they told us the following thing. Customers are providing longer than usual visibility with very strong order bookings through first half of 2026. We're pretty much already close to receive all the EUV orders we need for 2027. The CFO says the updated guidance includes expected demand from Elon Musk Terafab project. ASML says it expects to collaborate with Musk and his team on the Terrafab initiative. The industry will need major innovation to address AI power consumption and cost with more critical lithography exposures expected for advanced logic and memory. We also had I think air test system yesterday also very very good report or maybe updated guide can't remember but it's quite clear that the AI story is far from over tomorrow before the open we do have TSMC TSMC we do get monthly numbers so we already know that that one will also be a very uh good one and so yeah I do think we are going to have another big cycle upcycle for all the good companies in this whole AI semic conductor space. Will they pull all of the bad companies up with them? Probably. Uh that's why we're here. That's why we're going to flag whatever. Doesn't make any sense. Earning season is about to start. It's going to be quite fun. PayPal just well, it's it's still PayPal at the moment. We'll see what happens with that bit with that offer. If PayPal will respond until the earnings report and earnings call remains to be seen. Let me know what you think down in the comment section below. See you all in the next one. Bye-bye.