'PayPal lives in the wrong neighborhood' says Jim Cramer after stock hits 52-week low
When is it used to climbing a buying opportunity and when is it a gigantic red fly? Depends on the industry. Two days ago we got some pretty upsetting corporate report cards from Skyworks Solutions and PayPal. Skyworks is major producer of communications chips and they gave you a very downbeat view of things. I tell you it was down to depressing. PayPal on the other hand had a very slight degradation in margins for one line and it is sprawling financial technology operations. So you might think PayPal is the buying opportunity. One negative little seems to just lie a nitpick, right? Meanwhile Skyworks seem devastating.
No comeback in sight. Yet in reality it turned out to be the exact opposite. Skyworks initially sold stock for 13 points right around the opening of the S&A but if you sold it there because of worries about its clients, especially Apple, you completely blew it. On the conference call Skyworks didn't blame Apple at all. They're the largest customer. They blamed Android and some of the smaller low end Chinese phone markets. To me that's it.
And I gotta tell you China's only just started recovering and I expect a real robust comeback there. We know that from a diverse group of companies operating over there that most obvious being Starbucks that it's taking a little more time to come back than we thought. Sure enough the market eventually agreed with me and Skyworks rebounded from down 13 to finish down less than six bucks yesterday. But PayPal it dropped and it dropped and then it dropped some more. It never lifted including today where it lost another 4% the reason PayPal lives in the wrong neighborhood. It's considered a financial and nothing feels safe in that segment. At one point PayPal was the darling of e-commerce.
These days it looks more like a bank and right now bank stocks are poison. There's so many buy now pay later offerings, so many ways to pay for things online and in store, including a very competitive Apple pay that there's just no such thing as financial where just one line is soft at least not this morning. In this environment every financial is guilty until proven innocent. Don't miss a second of Mad Money. Follow at Jim Kramer on Twitter. Have a question? Tweet Kramer. Hashtag Mad Tweets.
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