PayPal shares up 15% as a string of good news cloaks Q2 loss

By:
on Aug 2, 2022
  • PayPal Holdings Inc swings to a loss of $341 million in its fiscal Q2.
  • The fintech announced a $15 billion share repurchase programme.
  • PayPal shares are up nearly 15% in extended trading on Tuesday.

Shares of PayPal Holdings Inc (NASDAQ: PYPL) are up nearly 15% in extended trading on Tuesday even though the fintech company swung to a loss in its fiscal second quarter.

Why are PayPal shares up after the bell?

  • Quarterly results were still better than the Street estimates
  • Elliott Management confirmed a $2.0 billion stake in PYPL
  • Announced a $15 billion share repurchase programme
  • Named Blake Jorgensen its new Chief Financial Officer

Jorgensen has previously served in a similar capacity at notable names, including Electronic Arts, Levi Strauss, and Yahoo. Despite the rally, PayPal shares are still down about 45% for the year.  

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PayPal Q2 earnings snapshot

  • Lost $341 million versus $1.18 billion in earnings last year
  • Per-share loss came in at 29 cents; the year-ago EPS was $1.0
  • Adjusted EPS printed at 93 cents, as per the earnings press release
  • Revenue jumped 9.0% on a year-over-year basis to $6.81 billion
  • Consensus was 87 cents of adjusted EPS on $6.78 billion in revenue
  • Total payment volume climbed 9.0% YoY to $339.8 billion

PayPal’s future outlook

PayPal shares were also up because the online payments processor raised its full-year expectations for adjusted EPS to $3.87 – $3.97. It, however, forecasts a 10% increase now in revenue this year – a percentage point below its previous guidance.

For the current financial quarter, the Nasdaq-listed company anticipated its per-share earnings to fall between 94 cents and 96 cents on $6.80 billion in revenue. In comparison, analysts had called for $7.02 billion in Q3 revenue.

Interim CFO’s remarks

PayPal ended the quarter with $15.6 billion in cash, cash equivalents, and investments. In the earnings press release, Gabrielle Rabinovitch – Senior Vice President and Interim CFO said:

We’re advancing our priorities and sustainably improving our cost structure. The cash flow generating power of our business is a strategic competitive advantage. We’re focused on creating value for our shareholders and strengthening our position as a leading global digital payments platform.

Wall Street currently rates PayPal shares at “overweight” and sees upside to $109 on average.

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