PayPal soars 8% on reported Elliott stake, BofA not so sure on activist value
hapabapa

PayPal (NASDAQ:PYPL) jumped 8% after reports that activist Elliott Management had taken a stake in the fintech company. 
The size of the stake wasn't immediately known, according to a WSJ report. Elliott has taken the stake to try to speed up the company's cost-cutting efforts, according to a Bloomberg report. The activist may become one of the fintech company's five largest investors.
BofA analyst Jason Kupferberg is a bit more skeptical of what impact an activist could have on PayPal (PYPL). PayPal (PYPL) is set to report its latest earnings results on Tuesday.
"The notion of an activist at PayPal has become a bigger discussion topic after the companyâs third straight guidance cut last quarter, though we question whether PYPL fits the mold for a classic activist playbook, as there are not large, separable chunks of the business to sell, the balance sheet is in great shape, management already took a restructuring charge in 1Q ..." Kupferberg wrote in a note.
Kupferberg, who has a neutral rating and $87 price target on PYPL, believes an activist could potentially be a distraction "at this juncture" and while an activist could push for a CEO change, the dynamic is complicated as CEO Dan Schulman is picking the company's new chief financial officer.
The Elliott stake news comes after analysts last week speculated the payments company may become a target for activists. It may be an opportune time for an activist investor to target PYPL CEO Schulman is about to turn 65 and the board will have to look at succession plan, Gordon Haskett's Don Bilson wrote in a note on Thursday, a note that was likely spurred on by Bernstein also discussing if PayPal could become an activist target.
The Bernstein note, written by analyst Harshita Rawat, is entitled "Can an activist get involved and what can they do?" Rawat highlights that PYPL is not trading at levels witnessed not since 2018 and has underperformed many of its large cap peers including Visa (V) and Mastercard (MA).
Rawat also advocated for potential "bold M&A" for PayPal (PYPL). Recall Bloomberg in October reported that PYPL had approached Pinterest (PINS) about a possible takeover. PayPal later said that it wasn't pursuing a PINS deal.