New Trade: Paypal ($PYPL) & Short IAC Interactive ($IAC)

By: ispeculatornew
Date posted: 06.14.2016 (3:00 am) | Write a Comment  (0 Comments)

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Today I am opening my 14th trade of the year between between 2 of the older players on my list. Things have been going well so far this year and as is always the case, you can see past 2016 (and previous years) trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaEarningsMkt CapRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
IACIAC/InterActiveCorp53.3159.9312.83-9.293.94.225.691.077/25/2016 $4,313,765,104.09 38.9513.047.02
PYPLPayPal Holdings Inc36.5433.420.861.5715.244.0611.26N/A7/27/2016 $44,566,220,398.51 7.57N/AN/A

Paypal is fairly new as a separate company but still worth looking at my usual chart:

 

IAC_PYPL_chart


Long Paypal (PYPL)

Despite a growing level of competition in the online payments space, Paypal remains the one dominant player thanks mostly to the lock-in/network effects. It also has been the one dominant global player while others such as Amazon (AMZN), Appel (AAPL), and Stripe continue to work on expanding their capabilities. I do still have my doubts about PYPL’s longer term position but it has been making some smart bets in the form of Venmo for example. The biggest argument for buying PYPL today is that relative to its valuation, it remains cheap compared to most of my board. Also, there have been rumors of a possible takeover of Paypal (PYPL) and that is certainly a nice option.

PYPL_chart

 

pypl

Next earnings: July 27th 2016

Short IAC Interactive (IAC)

In many ways, IAC has been an incredible engine of growth over the past decade. Shareholders have done well on the condition that they kept shares of units that ended up being spun off such as Expedia (EXPE), Tripadvisor (TRIP), Match Group (MTCH) but if you look at the return of the parent company alone, it has not been as impressive and I’m willing to bet that will continue by taking a new short position on it.

 

IAC_chart

Next earnings: July 25th 2016

Disclaimer: This trade on PYPL-IAC will be done on today’s opening,
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