For position traders, PayPal’s stock may have just taken a huge hit. On the other hand, Apple could be getting ready for a big boost. Do you remember Lotus 123? What about Word Star? Both of these companies used to be big. Lotus 123 was a spreadsheet company that was bigger than Microsoft. Word Star was a word processor, also bigger than Word. And then Microsoft combined them all into one package (Office), and now these two other companies no longer exist. Their end products turned out to just be features within a larger, far superior product.
This is exactly what Apple is setting out to do with PayPal and other person to person payment processors. However, as Apple’s pay system begins to take off and become integrated with the overall Apple product, many professional analysts are speculating that this will have no real benefit to shareholders, but end up just being a benefit to consumers. That’s still a great thing, and although the benefits may not be numerically noticeable, it does create an increased sense of loyalty among Apple customers. And that means that the long term outlook (think years, rather than weeks or months), is going to be better. For long term investors in Apple, it’s a good thing. For those that want to trade Apple over the short term based upon this information, it’s not going to be very helpful.
PayPal has struggled since separating from eBay. A lot of this has been attributed to growing pains, but the overall market for online and mobile payments is very lucrative, so investors have kept PayPal on their radar despite all of this. Binary options traders—and others—hoping to profit off of PayPal should strongly consider an approach that goes short on the stock. The long term outlook seems to be not nearly as strong as some experts have believed, and the short term struggles of the stock are making this more and more apparent. Not all brokers carry PayPal, and some traders may be tempted to go long on Apple instead of this approach, but as we’ve seen, this is not necessarily going to be a viable strategy for short term traders. Instead, the overarching fundamentals need to be considered for Apple and then the short term technical indicators should be evaluated in light of this. This seems like a boring approach, but it’s one that will give you far better results than if you were to try and predict what these minor news items might do to stock prices in this particular area of focus.
Apple still has a strong outlook for 12 months from now. The stock is currently around $112 per share, with a one year outlook of $148, according to experts. Over the short term, consider what the overall market is doing. Stock indices are struggling. The Dow Jones had one of the worst weeks last week that it has had in the last few months. This is inevitably going to bring stock prices down, but the strong companies will bounce back. How long this will take depends on the economy and the strength of the company itself.
PayPal has a great one year outlook, but do not be fooled. There’s far too much uncertainty here and there’s a good chance that it will not go up to the $41+ per share that experts have predicted. Uncertainty, plus a narrow product niche do not look good for the company. If you have doubts about this, think about where Lotus 123 and Word Star are right now. They had great products once upon a time, but they have since completely disappeared.
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