Will PayPal Continue Its Friction-Free Rise With Q3 Release?
Connor Campbell | Oct 17, 2017 14:18
Charts don’t get much better than PayPal’s 2017 display. A couple of wobbles here and there aside, the stock has not stopped climbing. At the start of the year it opened at $40.30; now it’s at a current trading price of $67.32, a hefty 70% increase in the space of a around 10 and a half months.
So, why have investors gone potty for PayPal? Well, its fourth quarter figures in January actually sparked one of those aforementioned, and rare, wobbles. While the company posted a 16.6% rise in Q4 revenue, as expected, with a 10% jump in active customer accounts, its downbeat outlook, based on the impact of currency fluctuations and increased competition, soured the update and dragged the stock back below the $40 mark.
The response to its Q1 statement at the end of April was very different. Both earnings per share and revenue beat estimates; the former came in at 44 cents against the 41 cents forecast, while the latter rose 17% to $2.98 billion. Throw in a $5 billion share buyback, and a 22.5% surge in total payment volumes, and investors were understandably impressed, sending PayPal 5% higher.
The stock continued to rise across May, the month bolstered by the rollout of PayPal’s integration with Google’s Android Pay in the US. In June the company arguably secured its biggest coup yet, with iPhone and iPad users now able to make purchases on the App Store with PayPal. A week later PayPal continued to expand, this time extending its deal with Visa (NYSE:V), which covers services in the US and Asia, to Europe.
Most recent was July’s stellar second quarter offering. Once again earnings per share and revenue surpassed expectations, at 46 cents and $3.14 billion respectively, allowing the company to raise its full year guidance. Elsewhere mobile subsidiary Venmo saw a remarkable 103% surge in total payment volume year-on-year, while PayPal continued its international expansion by announcing a partnership with Chinese tech giant Baidu (NASDAQ:BIDU).
In terms of Thursday’s Q3 results, analysts are expecting PayPal to post a 25% jump in earnings to 44 cents per share, off of a 19% increase in revenue to $3.17 billion. Updates on the Android Pay, App Store, Visa and Baidu ventures will be welcomed, as will be another stellar quarter of growth from Venmo.
PayPal Holdings Inc (NASDAQ:PYPL) has a consensus rating of ‘Buy’ with an average target price of $65.08.
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