“While we understand the skepticism, we believe the reaction in PYPL to be overdone and would use this sell-off as an opportunity to add to our position,” Jim Cramer said Wednesday afternoon in a note to members of CNBC’s “Investing Club.”
Cramer made it clear he will not be adding to his PayPal position, citing current restrictions. He’s restricted from trading any stock that he mentions on CNBC for three full days following the mention.
Related Link: PayPal Looks To Buy Pinterest In $39B Deal: Report
PayPal and Pinterest don’t seem like a natural fit for one another, however, Cramer noted PayPal is working on building out an app, which would include much more than traditional finance services.
PayPal announced plans for the new app in September and said it would include “new in-app shopping tools that will enable customers to earn rewards redeemable for cash back or PayPal shopping credit and uncover deals with hundreds of merchants.”
When considering what management has revealed about the new app, the potential Pinterest acquisition starts to make more sense, Cramer said.
“Bottom line, we think today’s weakness represents a buying opportunity.”
If the acquisitions reports do not materialize, Cramer expects the stock to bounce back. If PayPal moves forward with the acquisition of Pinterest, he thinks “patient shareholders will be rewarded.”
PYPL Price Action: PayPal has traded as high as $310.16 and as low as $174.81 over a 52-week period.
The stock closed down 4.91% at $258.36.
Photo: courtesy of PayPal.