💸 What’s Up (Pay)Pal?

PayPal processed record transaction volumes in Q3, but foresees a relatively muted Q4


Hey Global Investor, here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Monday Close) 3,310.24 +40.28 (1.23%)

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USDINR (5 PM IST) 74.40 (1 Year +5.3%)


What’s Up (Pay)Pal?

PayPal processed record transaction volumes in Q3 but foresees a relatively muted Q4.

Background: Say “PayPal” and two names come to mind: Peter Thiel (the first outside investor in Facebook) and Elon Musk (with whose online banking company X.com, the Peter Thiel merged PayPal). Founded in 1998, Confinity, later renamed as PayPal, revolutionized online payments systems with cutting edge technology and an easy-to-use interface. It was acquired by eBay in 2002 and then spun off as a separate entity in 2015. Venmo, which has now become a verb for mobile payments in the US is a PayPal subsidiary.

Fast forward to 2020, PayPal has seen a surge in digital transactions. Last month PayPal announced it would allow users to hold bitcoin and other cryptocurrencies in its online wallet to transact with the 26M merchants in its network.

What Happened?: In Q3, one of the strongest in PayPal’s history, the company added 15.2M net new active customers and processed $247B in total payment volume. It also added 1.5M new merchant accounts in the last quarter. Venmo, for its part, processed $44B payments in Q3, a 61% jump Y-o-Y.

Key numbers:

  • Revenue: $5.46B vs. $5.43B expected
  • EPS: $1.07 per share vs. $0.94 expected
  • Net income rose 120% Y-o-Y to $1.02B.

PayPal is targeting 70M net new active accounts by the year-end.

However, amidst all the euphoria, PayPal said it anticipates Q4 adjusted earnings to grow 17% to 18%, well below the 41% growth rate reported in Q3. CEO Dan Schulman said the company is offering a prudent estimate for the upcoming quarter, in keeping with pandemic-related uncertainty, US presidential election, and concerns about social unrest.

Market Reaction: PayPal closed at $187.76, up 0.88%. Following the earnings report, the shares dropped 5.5% in after-hours trading. The stock is still down 3.98% in pre-market trading today.

Company Snapshot 📈

PYPL $187.76 +1.63 (+0.88%)

Analyst Rating (45 Ratings) BUY 82%  HOLD 16%  SELL 2%


Newsworthy 📰

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Later Today 🕒

  • Election Day
  • 7.30 PM IST: Factory orders
  • Before Market Open: Avient Corp Earnings (AVNT)
  • Before Market Open: Athene Holding Ltd Earnings (ATH)

Fun Fact of The Day 🌞

You can learn the High Valyrian language from Game of Thrones with an online course.



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