PayPal Stock Set to Be the Biggest Winner Here
George Soros is one of the most successful investors in history and right now he’s making a huge bet on another technology company: PayPal Holdings, Inc. (NASDAQ:PYPL). According to the SEC filing published on Monday, the billionaire investor is betting millions on PYPL stock, representing a big endorsement in the payment service’s future. Should others follow suit? Let’s take a look.
Why George Soros Is Betting on PayPal Stock
As one of the most successful investors in the last century, George Soros became infamous in 1992 as “the man who broke the Bank of England” when he gained more than $1. 0 billion in profit by hedging against the British pound.
But age certainly hasn’t stopped the investment guru, because he has been making big moves as of late. This is especially the case regarding PayPal.
The legendary billionaire investor’s company published a 13-F filing in which it outlined Soros’ long positions for the end of the third quarter of 2015. In the most surprising news, Soros poured nearly $137 million into the purchase of 4.4 million shares worth of PayPal stock this last quarter, which makes PYPL stock Soros’ ninth-biggest holding at the moment. (Source: “Soros Fund Management 13-F Filing,” SEC, November 16, 2015.)
Disclosed to the SEC, the filings by Soros fund’s management were filed on Monday, November 16. They are up to date for the period ending September 30.
As for why Soros chose PayPal as one of his top picks this time around, the answer is simple: the company has strong financials and huge upside potential. PayPal was a solid performer in the third quarter of 2015, having posted earnings per share of $0.26 and surpassing consensus estimates of $0.24. Revenue was also up for the company, with its $2.3 billion beating out predictions of $2.3 billion.
Net total payment volume (TPV) also surged by a robust 27% and the company saw its market share increase with 173 million active users reported. But it doesn’t end there, because PayPal is also forecasting long-term earnings growth to be in the range of 17.5%.
In addition to PayPal, George Soros significantly beefed up his holdings in Netflix, Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN). (Source: “George Soros is betting on eBay and PayPal,” Business Insider, November 16, 2015.) The investment guru grew his position in Amazon by 77,877 shares at a value of $39.9 million and claimed to own 317,535 shares in Netflix.
It looks as if investors are gravitating towards Netflix stock in order to hedge against the decline in the cable television industry. (Source: “Soros Checks into Netflix, Bids Herbalife Adieu,” Newsmax, November 17, 2015.) Cable providers are facing growing threats to their long-term survival, as consumers shift over to simpler, cheaper, and more convenient online streaming alternatives such as Hulu or Netflix.
These increased holdings in the aforementioned companies came at the expense of others, however. Soros decided to cut his losses in both Herbalife Ltd. (NYSE:HLF) and United Continental Holdings, Inc. (NYSE:UAL) at 1,968,833 and 1,302,512 shares, respectively. The former has faced a steep uphill battle in fending off rumors of a pyramid scheme–like corporate structure. The latter has faced serious allegations of its relationship with the Port Authority of New York and New Jersey.
The Bottom Line on PYPL Stock
The bottom line: George Soros knows what he’s doing. If the billionaire investor is accumulating shares of PYPL stock, I wouldn’t be inclined to bet against him.