2 Oversold Stocks With Major Reasons to Rebound

Key Points

• The recent market selloff has opened the door for potential bargain-hunting opportunities.
• Despite strong blowout earnings, MercadoLibre has pulled back almost 11% from its recent 52-week high.
• PayPal, down nearly 19% YTD, reported solid earnings and announced a $15 billion buyback plan, yet the stock remains in oversold territory.

The recent market selloff has left very few areas untouched. Fear and panic are taking hold as trade wars, tariffs, and economic uncertainty ripple through the financial landscape. But it’s not all doom and gloom. While the broader market pulls back, this downturn might present some compelling opportunities, especially for stocks trading near key support levels or at what could be considered a discount.

That seems to be the case with the two stocks below. Both have sold off sharply from their recent highs, yet they’ve also posted solid earnings beats. This intriguing combination of positive fundamentals and technical pullbacks suggests that these two names might be primed for a rebound.

MercadoLibre: A Blowout Quarter, Now 11% Off Highs

MercadoLibre, Inc. NASDAQ: MELI is Latin America's largest e-commerce and fintech platform. It operates in 18 countries, connecting millions of buyers and sellers through its online marketplace and offering various digital payments, logistics, and financial services.

Despite delivering knockout Q4 2024 earnings, MELI has tumbled more than 11% from its recent 52-week highs. The pullback seems tied to broader U.S. stock market weakness and a dose of profit-taking rather than any fundamental issues with the company itself. For long-term investors, this retreat could be a welcome buying opportunity.

MercadoLibre's Q4 numbers were nothing short of impressive. Revenue soared to $6.1 billion, a 37% year-over-year jump that easily beat Wall Street’s $5.9 billion estimate. Net income surged to $639 million, smashing the $402 million forecast. The marketplace remains on fire, with gross merchandise volume hitting $14.5 billion, up 56% when adjusted for currency swings. Meanwhile, its fintech arm, Mercado Pago, processed $58.9 billion in payments, up 33%, and its credit portfolio expanded by 74%, reaching $6.6 billion.

With the stock returning to a key support zone, previous resistance is now turned to support. This could be a golden entry point for investors seeking exposure to one of Latin America's most dominant tech companies. The fundamentals are strong, and this dip may not last long.

PayPal: Solid Earnings, Oversold Stock

PayPal Holdings NASDAQ: PYPL needs no introduction as one of the world’s largest and most established fintech companies, dating back to 1998. However, despite its long-standing leadership in digital payments, its stock has recently fallen out of favor.

After an aggressive selloff post-earnings, PayPal is now in correction territory, down nearly 19% year-to-date. The Q4 2024 report, released on February 4, 2025, showed solid results that topped expectations. Revenue rose 4% year-over-year to $8.37 billion, edging past analyst estimates of $8.3 billion. Net income reached $1.2 billion, with adjusted earnings per share (EPS) of $1.19, beating the $1.14 consensus forecast. Total payment volume (TPV) climbed 7% to $437.8 billion, just shy of the $438.2 billion projection.

Adding to its long-term appeal, PayPal announced a $15 billion share buyback program, with $6 billion planned for 2025. This shows strong confidence in its growing cash flow, which surged 40% to $2.1 billion for the quarter.

Yet, despite these positives, the stock dropped nearly 10% post-earnings, mainly due to concerns about slowing branded checkout growth and slightly lower transaction take rates. Still, PayPal guided for 2025 EPS of $4.95 to $5.10, exceeding Wall Street’s $4.90 estimate, signaling a clear focus on growth and operational efficiency.

Now trading below its 200-day moving average, with an oversold RSI and hovering near a support zone around $65, PayPal might be an attractive buy-the-dip candidate. For investors willing to look past the short-term noise, this could be a prime moment to grab shares of a fintech leader with a strong turnaround narrative.

The Bottom Line

While fear has gripped the markets, not all sell-offs are permanent. MercadoLibre and PayPal have delivered strong earnings yet are trading at potential discounts. These two oversold stocks may be worth a closer look for investors seeking quality names with solid fundamentals and promising technical setups.