Why PayPal Stock Just Went to the Moon

PayPal Holdings (NASDAQ: PYPL) banal exploded 17.1% higher done 10:35 a.m. ET Wednesday connected reports the e-payments institution has received a buyout connection from privately held companies Stripe and Advent, possibly with assistance from publically traded Block (NYSE: XYZ).

The reported buyout price: $53 billion.

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PayPal: Buy it now?

As CNBC reports this morning, Stripe, Advent, and Block person offered to get PayPal for $60.50 per share, astir 28% supra PayPal's closing terms past night. $17 cardinal of the full $53 cardinal acquisition terms would beryllium paid successful stock, and the remainder successful cash.

Not each the details of the transaction are clear, and nary of the companies reportedly progressive are commenting connected the reported acquisition, which Reuters archetypal reported. Regardless, with PayPal banal down 35% implicit the past twelvemonth (even aft today's jump) versus a 20% summation for the broader S&P 500, PayPal shareholders are yet seeing a airy astatine the extremity of the passageway and hoping a buyout from Stripe and Advent whitethorn prevention them.

What's adjacent for PayPal?

But is this airy the passageway exit, oregon an oncoming train?

According to the CNBC report, PayPal has received the connection and plans to sermon it astatine a committee gathering connected July 20, truthful the reply should travel soon. The bully quality is that with PayPal banal trading astatine little than 9x net astatine contiguous -- and lone astir 11.3x net astatine the reported acquisition terms -- the banal looks cheap, and there's bully crushed to judge Stripe, Advent, and Block would beryllium funny successful snapping up PayPal connected the cheap.

The bad news is that if PayPal's committee thinks it's too cheap, it mightiness garbage to merchantability -- and if that happens, PayPal's banal terms could spell close backmost to wherever it was yesterday. Caveat investor.

Should you bargain banal successful PayPal close now?

Before you bargain banal successful PayPal, see this:

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