David Einhorn's New PayPal Bet Faces Its First Test After Stripe Deal Collapses

David Einhorn‘s newest investment is facing an early reality check. Just weeks after DME Capital Management — Einhorn’s investment firm and the successor to Greenlight Capital —revealed a new 1.4 million-share stake in PayPal Holdings Inc. (NASDAQ: PYPL ), the payments company’s stock tumbled in premarket trading after reports that Stripe and Advent International had abandoned their takeover pursuit. The selloff raises an important question for investors: Was PayPal’s recent rally driven by improving fundamentals—or by takeover optimism that has now evaporated?

A Stripe-Advent consortium proposed a $60.50-per-share offer for PayPal, valuing the fintech at roughly $53 billion. However, differences over valuation and the regulatory complexity of such a large transaction ...