Stripe and Advent International want to buy PayPal for $53 billion. The stock jumped because investors heard a number and got excited. This is how markets work now. Someone says a price and everyone else nods.
PayPal processes payments. Stripe processes payments. After this deal closes, the combined company will process payments but charge more because there's one fewer company to choose from. Revolutionary stuff.
The offer is $60.50 per share. PayPal traded lower than that yesterday. Today it trades higher. Retail traders are calling their cousins to explain they finally timed something right. They did not time anything right. They got lucky because two companies decided Wednesday was merger Wednesday.
Technical analysts have been drawing lines on PayPal charts for months. Support at $55. Resistance at $62. Head and shoulders forming. None of it mattered. The price moved because Stripe wrote a letter. Every triangle pattern you spotted was astrology. Every trendline you drew was a crayon on a napkin.
Advent International is a private equity firm, which means they will buy PayPal, fire everyone who makes the company work, then sell it in five years for more than $53 billion while explaining they "unlocked value." The value was already there. They just locked everyone else out of the building.
Some analyst will publish a report saying the deal makes strategic sense. Another will say it faces regulatory hurdles. Both will be wrong but keep their jobs. The deal will either happen or not happen, and when it does or doesn't, someone will write that the outcome was obvious all along.
Your moving averages didn't predict this. Your RSI didn't signal this. Your Fibonacci retracement didn't whisper this in your ear at 3 a.m. You were drawing lines while Stripe's lawyers were drawing up term sheets, and only one of those activities moved the stock price.
Photo by on Unsplash
Leave a Comment