PayPal (PYPL.US) stock jumped 13.0% in premarket after the financial services company posted better than expected second quarter results. Also news that Elliott Management Corp. confirmed a $2 billion stake in the company supported bullish sentiment.
-
Company earned 93 cents per share, down 19% from a year earlier, however it topped Refinitive analysts’ projections of 86 cents per share.
-
Revenue rose 9.0% to $6.81 billion and slightly beat market estimates of $6.79 billion.
-
Operating cash flow in the quarter came in at $1.5 billion and free cash flow at $1.3 billion, up 12% and 22% YoY, respectively. Total payment volume increased 9%, to $339.8 billion.
-
Number of active accounts rose 6% to 429 million YoY, however failed to match Wall Street expectations of 432.8 million.
-
“Our second-quarter results were solid with currency-neutral revenue and non-GAAP earnings growth exceeding expectations,” PayPal President and Chief Executive Officer Dan Schulman said in the earnings release. “We continue to gain share as we execute across our key strategic initiatives, even as we drive operational efficiency across our business.”
-
On the flip side, PayPal recorded $341 million net loss, compared with a $1.18 billion profit during the year-earlier period.
-
Paypal added $15 billion to its stock repurchase program and authorized cost-savings program.
-
Company reported significant progress in terms of capital efficiency and expects to reduce costs by $900 million in 2022 and save a minimum of $1.3 billion next year.
-
Company confirmed that Elliott Management has taken a strategic stake in the company. Elliott, well-known as an activist fund, now holds a $2 billion stake in PayPal and is a key driver in PayPal’s cost-savings program.
-
PayPal said it has a “commitment to work with Elliott Investment Management on a comprehensive evaluation of capital return alternatives”.
-
In turn Elliott Managing Partner Jesse Cohn said "PayPal has an unmatched and industry-leading footprint across its payments businesses and a right to win over the near and long term."
-
Morgan Stanley increased price target to $134 from $129 as latest quarterly figures “should help improve narrative”.
-
Above news overshadowed muted financial outlook. For the current quarter, PayPal forecasts an adjusted profit of 94 to 96 cents a share, in line with estimates. However, expected revenue of $6.8 billion stands below analysts' estimates of $7.02 billion. It is worrisome taking into account that following the recent sell-off, the majority of analysts lowered their expectations for second and third quarters.
-
For the full fiscal year, the company expects profit in the region of $3.87 to $3.97 per share on revenue of $1.4 trillion.
PayPal (PYPL.US) stock rose sharply in premarket and is currently testing a major resistance zone at $101.00, which is marked by the upper limit of the 1:1 structure. Should a break higher occur, upward move may accelerate towards next resistance at $123.90 which coincides with 23.6% Fibonacci retracement of the last downward wave. On the other hand, if sellers manage to regain control, another downward impulse towards support at $81.60 may be launched. Source: xStation5
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appThe content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
