Mobile payment platforms plunge is creating an opportunity to re-enter, according to traders and analysts.
The slide in the marquee payment names comes as fed rate rises spook the overall tech market into a correction. The tech-heavy Nasdaq is slipping by about 3% pre-market amid the action.
Nasdaq 100 was down 4.4% today, its worst decline since August 2011. It has not closed below its 200-day moving average since June 2016 (575 trading days), now only 0.5% above it. $QQQ pic.twitter.com/CO1dU6RbKO— Charlie Bilello (@charliebilello) October 10, 2018
However, the move could be a positive for investors that had the foresight to build cash bases.
For example, the move was anticipated by the Action Alerts Plus team, which has diligently built out its capital base to re-enter these names as they correct.
"We sold PayPal as it marched higher in what we felt was too short a timeline, trimming shares at $83.94, $87.51 and $89.71," the team said.
The fortuitous trimming of the investment will allow the team to re-enter and achieve even higher returns moving forward on a name like PayPal.
"We still believe that longer-term, digital is the future of payments," Jim Cramer's Action Alerts PLUS team declared. "Thanks to our discipline we are in a prime position to start buying back shares."Fed Fracas
Additionally, one of the more level-headed figures in the Trump cabinet is Treasury Secretary Steven Mnuchin who said that the Fed is not to blame for the correction, despite the protests of the Commander-in-Chief.
"I don't think there was any new news that came out of the Fed [Wednesday] that wasn't there beforehand," Mnuchin said at an International Monetary Fund meeting in Bali on Thursday morning. "Markets go up, markets go down."
Analysts are particularly bullish on Square, as its slide from a key executive departure seems to cloud its potential secular success.
I'm so happy for Sarah. She's going to be great at running a company. Square is different tho. We're organized by business unit, like Cash, Caviar, Seller, Capital...and a lead/CEO for each. They are the execution, not me or Sarah. Square is built to be a durable ecosystem. https://t.co/OLcOIbbkXm— jack (@jack) October 10, 2018
According to a Keybanc Capital Markets survey led by Director of FinTech Josh Beck, Square is poised to remain a leader in payments for businesses as the mode of transaction continues to transition to mobile and online.
"70%+ of sellers did not even consider a competitor when selecting Square and 45% started their first payment relationship with Square, indicating a dominant brand among small businesses," Beck explained.
He indicated that Square's underlying product line is the key story for the company's emerging opportunities.
"Square has a rich ecosystem of transaction, SKU-level, customer, and inventory data that could enable it to extend beyond payments and play a larger role in commerce, which positively ties to one of our key secular FinTech themes," he wrote in a note explaining the survey. "Most of the initiatives remain early cycle, and thus could leave room for substantial outperformance if Square is able to scale them efficiently."
Keybanc raised its price target from $75 to $115 on the back of the survey, offering a significant premium on today's dwindling share price. The price increase echoes the take of Credit Suisse, which raised their price target to $94 even amid the recent market rumblings.Bottom Line
For investors wily enough to have raised capital into the market madness this week, these payment platforms offer an attractive discount on a secular play for the longer term, according to experts.