PayPal stock (NASDAQ: PYPL) rose 5.7% in the past five trading days. In comparison, the larger S & P500 has risen 2.4% over the past five trading days. The stock rose after the company announced on March 30 the launch of “Checkout with Crypto” which will allow users to pay with cryptocurrencies. Now, users with Bitcoin, Ethereum, and Litecoin will be able to instantly convert their cryptocurrencies to US dollars at checkout to make purchases through PayPal. But will the company resume its upward trajectory in the coming weeks, or is a stock decline imminent? According to machine learning engine Trefis, which identifies trends in a company’s stock price using 20 years of historical stock market data, PayPal stock returns average around 5% over the next month (twenty and one trading day) after experiencing a% increase in one week (five trading days). Additionally, the stock is expected to outperform the S & P500’s returns by 2.8% over the next month (twenty-one trading days).
But how would those numbers change if you wanted to hold PayPal stock for a shorter or longer period of time? You can test the answer and many other combinations on the Trefis Machine learning engine to test the chances of PayPal shares rising after a fall. You can test the chances of recovery over different time intervals of a quarter, a month, or even a single day!
MACHINE LEARNING MOTOR – try it yourself:
IF The PYPL share has moved by -5% over five trading days, THEN over the next twenty-one trading days, the PYPL share moves average 5.8%, which implies a excess return by 3.7% compared to the S & P500.
More importantly, there is a 74.1% probability of a positive feedback over the next twenty-one trading days and a probability of 76.8% positive excess return after a variation of -5% over five trading days.
Some fun scenarios, FAQs and explanation of PayPal Holdings stock movements
Question 1: Is the average return on PayPal Holdings shares higher after a decline?
Case 1: PayPal Holdings stock drops -5% or more in a week
Case 2: PayPal Holdings stock grows 5% or more in a week
Is the average return on PayPal Holdings shares higher in the month following case 1 or 2?
The PYPL share is doing better after case 1, with an average return of 5.8% over the following month (21 trading days) in case 1 (where the share has just suffered a loss of 5% during of the previous week), against an average return of 4.2% for case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in Case 1, and an average return of only 0.5% for Case 2, as detailed in our dashboard. which details the average return of the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how PayPal Holdings stock is likely to behave after a specific gain or loss over a period of time.
Question 2: Does patience pay?
If you buy and hold PayPal Holdings stock, over time short-term fluctuations are expected to cancel each other out and the positive long-term trend will favor you – at least if the company is otherwise strong.
Overall, according to data and calculations from Trefis’ machine learning engine, patience absolutely pays for most of the stock!
For the PYPL share, the returns over the next N days after a -5% change over the last 5 trading days are detailed in the table below, along with the returns of the S & P500:
You can try the engine out to see what this chart looks like for PayPal Holdings after a larger loss in the past week, month, or quarter.
Question 3: What about the average return after a rise if you wait a while?
The average return after a rise is naturally lower than after a fall, as detailed in the previous question. Interestingly, however, if a stock has won in the last few days, you’d better avoid short-term bets for most stocks.
The returns of PYPL over the next N days after a 5% change in the last 5 trading days are detailed in the table below, along with the returns of the S & P500:
It is quite powerful to test the trend of PayPal Holdings shares yourself by changing the entries in the charts above.
While PayPal stock may have moved, do you think Bitcoin could disrupt the banking industry? Looking for the benefits of adopting Bitcoin, without buying into the cryptocurrency itself? Discover our theme on Cryptocurrency stocks.
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