Should I buy PayPal shares after Q3 results?
PayPal (NASDAQ: PYPL) shares have weakened more than 10% since the beginning of November, even though the company reported strong third-quarter results. PayPal continues to expand its business, and its management expects another EPS beat in the next fiscal quarter.
PayPal added 13.3 million new active accountsCopy link to section
PayPal reported strong third-quarter results this Tuesday; total revenue has increased by 13.24% Y/Y to $6.18 billion, slightly below expectations, while the earnings per share were $1.11 (beats by $0.03).
PayPal continues to benefit from the increased adoption of digital payments, and the company made strong inroads into the cryptocurrency market as a high-margin enabler of digital transactions.
It is important to say that the total payment volume grew 26% to $310 billion in the third quarter, and the company added 13.3 million new active accounts. Active accounts have increased 15% year-over-year, and PayPal remains on track to deliver more than 52 million merchant accounts for the year.
PayPal ended the third quarter with 416 million active accounts and continues to invest heavily in its growth initiatives. Dan Schulman, CEO of PayPal, added:
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We are fortunate to be a market leader in an environment with so many potential opportunities and operate in an industry with a number of favorable tailwinds. We will continue to execute against our game plan and responsibly explore the options in our rapidly evolving ecosystem so that we remain the leader we are today in tomorrow’s world.
Through the third quarter, volume trends steadily improved each month, but CEO Dan Schulman said that the company is seeing the impact of global supply chain shortages because consumer confidence has weakened, while with the economy reopening, more people may be likely to do their holiday shopping in-store.
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The supply chains crisis represents a serious issue for the global economy, and it has the potential to be a headwind to growth. Despite this, the company’s management expects a 22% compounded annual growth rate for EPS over the next five years, while the revenues should rise to $50B by 2025.
For 2021, PayPal expects revenue to be in the range of $25.3 to $25.4 billion, which represents an increase of approximately 18% from last year. Non-GAAP earnings per share should be around $4.60, representing a 19% increase on top of the 31% growth last year.
Bears in control of PayPalCopy link to section
PayPal shares have weakened from their record highs above $310 registered in July 2021, and the current share price stands at $206.
PayPal shares remain under pressure, and if the price falls below $200 support, it would be a strong “sell” signal. On the other side, if the price jumps above $240 resistance, it would signal trading shares, and the next target could be at $260 or even above.
SummaryCopy link to section
PayPal continues to benefit from the increased adoption of digital payments, and the company reported strong third-quarter results on Tuesday. PayPal shares remain under pressure; still, if the price jumps above $240 resistance, the next target could be at $260.