5 Innovative Stocks in Cathie Wood’s Portfolio That Failed to Impress

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1. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 110

Decline in Share Price in the Last 6 Months: 59.45%

PayPal Holdings, Inc. (NASDAQ:PYPL) is an American multinational financial technology company that facilitates online payments. Cathie Wood cut back on her PayPal Holdings, Inc. (NASDAQ:PYPL) stake in the fourth quarter of 2021, dumping 72% of the stock. She held 217,493 shares, worth $41 million in Q4. 

On February 1, PayPal Holdings, Inc. (NASDAQ:PYPL)’s Q4 results were disclosed, and the company posted an EPS of $1.11, missing estimates by $0.01. Revenue over the period jumped 13.11% year-over-year to $6.92 billion, outperforming consensus by $30 million. PayPal Holdings, Inc. (NASDAQ:PYPL) stock slid 12% in after-hours trading following its Q1 guidance that trailed consensus estimates.

Bernstein analyst Harshita Rawat lowered the price target on PayPal Holdings, Inc. (NASDAQ:PYPL) on February 3 to $140 from $180 and kept a Market Perform rating on the shares. The analyst noted that PayPal Holdings, Inc. (NASDAQ:PYPL)’s Q4 was perhaps one of the most disappointing quarters he recalls for the company. The biggest negative surprise was an abrupt change in strategy to focus more on user engagement versus user growth to drive revenue growth, Rawat added.

According to the database of elite funds maintained by Insider Monkey in Q4 2021, 110 funds were bullish on PayPal Holdings, Inc. (NASDAQ:PYPL), down from 123 funds in the prior quarter. Fisher Asset Management owned the biggest stake in the company, with 14.4 million shares worth $2.72 billion. 

Here is what Polen Focus Growth has to say about Paypal Holdings, Inc. (NASDAQ:PYPL) in its Q4 2021 investor letter:

“The top absolute detractors during the fourth quarter (includes) PayPal. PayPal was the most notable underperformer during the quarter and year. PayPal’s business continues to thrive, even on difficult comparisons with 2020. As the world’s largest digital wallet and fintech company, PayPal benefits from strong secular tailwinds from e-commerce and digital payments.

The negative share price reaction stemmed from two issues in our view. First, management modestly raised its 2021 revenue and earnings guidance early in the year, only to reduce it back to its original guidance. We have noticed that PayPal has tried to give overly precise guidance in the past and has had to recalibrate.

Overall, the company is growing well within our expectations and at what we believe to be a healthy rate. In addition, headwinds from its rapidly declining processed transactions from the eBay marketplace are not material to PayPal’s long-term success, in our view…” (Click here to see the full text)

You can also take a look at Billionaire Leon Cooperman Is Buying These 10 Stocks and 10 Best Stocks to Buy According to Warren Buffett.

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