PayPal (PYPL) is scheduled to report results of its third fiscal quarter after market close on November 2, with a conference call scheduled for 5:00 pm EDT.
What to watch for:
1. OUTLOOK: During the company’s last earnings call, PayPal said it sees third quarter revenue growth of about 23%, and sees fiscal year 2020 adjusted earnings per share growth of 25%. The company also said it expects fiscal year 2020 revenue growth of about 20% and 22% FXN.
2. COVID-RELATED TAILWINDS: Last month, Barclays analyst Ramsey El-Assal raised the firm’s price target on PayPal to $235 from $228, keeping an Overweight rating on the shares. While third quarter Expectations are elevated, COVID-related tailwinds “should see the company through,” El-Assal told investors in a research note. Leading indicators show that e-commerce growth has moderated slightly quarter-over-quarter “but remains at robust levels,” the analyst added. Meanwhile, Mizuho analyst Dan Dolev also raised his price target on PayPal to $290 from $285, keeping a Buy rating on the shares. The analyst said that his work points to “ample upside” to third quarter total payment volume estimates, better than expected revenue and “upbeat” preliminary 2021 guidance as PayPal’s fundamentals “continue to strengthen.” The analyst sees 33%-34% TPV growth, ahead of guidance at 30%.
3. VENMO CREDIT CARD: Venmo has introduced its first-ever Venmo Credit Card, issued by Synchrony (SYF) and powered by the Visa (V) network, which gives customers automatic cash back on every eligible purchase, a personalized rewards experience, and the ability to manage the card directly in the Venmo app. Commenting on the news, JPMorgan analyst Tien-tsin Huang said the Venmo card was “worth the wait.” The analyst likes the prospects of the Venmo credit card as not only a monetization vehicle, but also as a means to bring Venmo offline. The card itself shares many of the same features and functions of the Venmo app used by 60M users that represent a “captive audience for PayPal to market the Venmo credit card to,” Huang contended.
4. NEW CRYPTOCURRENCY SERVICE: Last month, PayPal launched a new service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal account, and signaled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases at its 26M merchants worldwide. The company is introducing the ability to buy, hold and sell select cryptocurrencies, initially featuring Bitcoin, Ethereum, Bitcoin Cash and Litecoin, directly within the PayPal digital wallet. The company plans to expand the features to Venmo and select international markets in the first half of 2021. The service is enabled in the U.S. through a partnership with Paxos Trust Company, a regulated provider of cryptocurrency products and services.
PayPal has also been granted a first-of-its-kind conditional Bitlicense by the New York State Department of Financial Services. There are no service fees when buying or selling cryptocurrency through December 31, 2020, and there are no fees for holding cryptocurrency in a PayPal account.