PayPal shares continue to trade in a bull market after better than expected Q4 results

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Feb 20, 2021
  • Paypal reported better than expected Q4 results
  • PayPal continues to benefit from the increased adoption of digital payments
  • Total revenue has increased by 23.4%, and the company added 16.0 million new active accounts

PayPal (NASDAQ: PYPL) shares have advanced more than 24% since the beginning of January, and the current share price stands around $286. Paypal reported better than expected Q4 results this February, and the company continues to expand its business.

Fundamental analysis: PayPal continues to benefit from the increased adoption of digital payments

PayPal shares are trading near an all-time high, and as long the price is above $250, there is no risk of the trend reversal. PayPal reported Q4 results this February; total revenue has increased by 23.4% Y/Y to $6.12B while Q4 GAAP EPS was $1.32 (beats by $0.66).

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Total revenue has increased above expectations (+$30M), and the company added 16.0 million new active accounts in Q4. PayPal has proven stability in challenging market conditions, and the management expects  FY2021 revenue to be around $25.5B.

PayPal continues to benefit from the increased adoption of digital payments, and even as the end of the coronavirus comes into sight, more consumers are expected to retain this habit. The company expects a 22% compounded annual growth rate for EPS over the next five years, while the revenues should rise to $50B by 2025.

“PayPal Holdings targets increasing its number of active accounts over the next five years to 750M from the 377M it had at the end of 2020,” said CEO Dan Schulman.

CEO Dan Schulman also said that we would see a new financial system emerge soon, and PayPal can be a part of that.

“PayPal digital wallet will bring together payments, shopping, investing, financial services. Also will include such features as rewards point redemptions, utilizing cryptocurrency, utilizing central bank digital currency when that’s available, and streaming services,” said CEO Dan Schulman.

On the other side, Dan Schulman sold 10K shares last week at prices ranging from $298.73 to $308.05 per share. Schulman still owns 140,768 shares of PayPal, but this is certainly not an encouraging sign for investors.

Technically looking, PayPal shares could advance even more, but the risk/reward ratio is not good enough for “value” investors.

Technical analysis: $250 represents a strong support level

PayPal shares have been moving in an uptrend since the beginning of April, and for now, there is no signal of the trend reversal.

Data source: tradingview.com

The critical support levels are $250 and $200; $300 and $320 represent the resistance levels. If the price jumps above $300 resistance again, the next target could be around $310.

On the other side, if the price falls below $250, it would be a firm “sell” signal, and we have the open way to $200.

Summary

PayPal continues to benefit from the increased adoption of digital payments, and the company reported better than expected Q4 results this February. Total revenue has increased by 23.4%, and the company added 16 million new active accounts in Q4. PayPal shares are trading near an all-time high, but the risk/reward ratio is not good enough for “value” investors.

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