Concerns about the business model of the digital payments industry appear to be subsiding, according to a Reuters article. The risks associated with the entry of giants like Amazon may have been overestimated. The BMO analyst raised the recommendation on PayPal to outperform. The reason would be that after the steep drop in 2021, the stock is now quoting at reasonable multiples that express the true value of the company. This could therefore be an accumulation phase.

Paypal [PYPL.O] closed at $194.9 (+3.4%) and is at $195 (+0.03%) in pre-trading. The scenario seems to be improving significantly for PayPal. In particular, the first resistance level that will tell us about the goodness of the bullish movement is the one in the $200/$204 area. The break in strength of this price range should allow short targets towards $210 and $222. The latter, however, is a very hard obstacle to break. In fact, if Paypal were to break $222, the potential would reopen to return to the 2021 maximum at $209. It’s still early to say, of course. So, let’s go step by step. We also point out a rare but interesting chart pattern on RSI: a bullish swing failure, followed by a divergence on the oscillator with a break of the resistance line (first line in blue on RSI at 38.3) and then a pull back. The pattern suggests a rise but, as always, confirmation on prices is NECESSARY, or the breakout of $200, preferably with strength.

We recommend going LONG on the stock on the break of $200/$204 by buying the Leverage Shares PayPal 3x ETP (ISIN: XS2297550217), with a short-term target towards $210 and later at $222. Alert/stop loss should be above $178 (closing daily).