Over the past few years, I’ve had a wild ride with PayPal stock. I bought in during the highs, averaged down through the lows, and sold near the bottom. This journey has been humbling, and more importantly, educational.
Below are some key lessons which I learned.
Lesson 1: Random Buying and Selling Without a Framework
I started buying PayPal in early 2021 at $245.50, believing it had dipped from its highs and was a bargain. Then I added more at $271, only to watch it nosedive as Wall Street turned sour on fintechs. Instead of stepping back and reassessing, I doubled down multiple times—buying more at $205, $188, $167, and so on, all the way to $67.50. Along the way, I also sold some holdings at $131 and $91, which totally reflected my ignorance. Eventually, I panicked and decided to sell off most of my holdings at $57.55 in Feb 2024.
The mistake: I let emotions dictate my trades. I bought because prices were falling, not because I had high conviction in the business. I sold out of frustration when prices hit a new low, not because the fundamentals had changed for the worse.
The lesson: Don’t fly blind. Every trade needs a mental framework: Why am I buying or selling? What’s the long-term view? What would change my mind? Without these, it’s too easy to fall into the trap of “buy the dip” and “sell in despair.”
Lesson 2: Averaging Down Without Understanding the Business
Averaging down can be powerful, but only when you truly believe in the business. In my case, I didn’t.
PayPal was and still is under immense competitive pressure from the likes of Apple Pay, Google Pay, Block's Cash App, and even new platforms emerging globally. When eBay phased out PayPal as its default payment processor, it raised a red flag. Despite all this, I kept buying.
Why? Because the price kept dropping, and I wanted to “recover” my losses.
The mistake: I was speculating, not investing. I didn’t truly believe PayPal had a strong economic moat. I didn’t study its financials, customer retention metrics, or innovation pipeline. I was just hoping for a rebound.
The lesson: Before you buy a stock, ask yourself: Do I understand this company? Do I believe it can grow and compete over the next 5–10 years? If the answer is “not really,” it’s speculation not investment.
Lesson 3: Chasing Hype and Valuation Disconnects
In hindsight, my initial purchases were fueled by pandemic-era hype. PayPal surged as online spending exploded. The narrative was compelling: digital wallets, touch-free payments, e-commerce boom.
But the valuation became stretched and I didn’t question it. I bought at elevated prices without thinking, Is this growth sustainable?
When economies reopened, PayPal's user growth slowed. The post-pandemic world looked different, and the company's prior momentum faded.
The mistake: I bought into the narrative, not the numbers. I assumed the good times would continue and didn’t question whether the price reflected future potential.
The lesson: When a stock is surging, pause and assess: Is this growth real and sustainable? Or is it driven by temporary trends and market excitement? Always weigh hype against fundamentals.
The most painful mistake: Selling at the Bottom
I have since divested my entire Paypal holdings at a loss of almost 40%.
I didn’t have an exit strategy and I let frustration and fatigue guide me.
The lesson: Selling should be as intentional as buying. Exit based on valuation, business deterioration, or better opportunities not emotion.
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