Michael Burry: PayPal Takeover Bid 'Too Low,' Real Value Could Hit $100
Michael Burry, the investor renowned for his short position against the housing market in 'The Big Short,' has dismissed the 60.50 USD per share cash takeover offer for PayPal (NASDAQ: PYPL) from private payments firm Stripe and private equity firm Advent International as 'simply too low,' valuing the company at over 53 billion USD. PayPal shares surged 17% on the news, closing at 55.52 USD.
Burry argues that the offer undervalues the company based on his intrinsic value (IV) models, estimating PayPal's true worth at IV8-IV10 levels, with IV10 ranging between 75-80 USD and IV8 reaching 110-115 USD. He suggests a control premium would push the bid closer to 100 USD per share, calling the current offer an initial proposal. He explicitly states, 'I am not selling, and I believe it is only an opening bid.'
While Burry’s assessments are subjective, PayPal’s financial metrics support his argument. Strong cash generation and aggressive buybacks suggest the company may warrant a higher valuation. However, the proposed takeover could signal strategic consolidation in the payments sector. Burry’s stance underscores investor skepticism toward underwhelming bids for industry leaders, potentially influencing market sentiment and options activity, including VIX volatility and gamma squeeze dynamics.
Markets are sensitive to undervaluation of industry stalwarts. Burry’s push for a 100 USD/share bid reflects confidence in PayPal’s fundamentals, though macroeconomic factors like interest rates and currency fluctuations will likely shape the outcome of such a high-stakes acquisition.