PayPal Holdings Inc. (NASDAQ: PYPL) has announced that it will release its Q3 2021 earnings on November 8, after markets close.
What to look for
Over the past year, the company's shares have performed well, outperforming the well-outperforming industry average. The company's two-sided platform, simplicity, secure transactions, fast-growing digital payments sector opportunities, and strategic partnerships will continue acting as tailwinds for revenue and earnings growth. Another tailwind that will boost earnings is the PayPal Checkout experiences and solid momentum of P2P transactions. However, the growing digital payments sector competition and forex headwinds will be a major concern for the firm.
Earnings: Stockearning’s Estimated EPS for Q3 2021 is $1.08 representing a YoY change of 0.9%. Historical EPS Performance for the past 12 quarters shows that the company has topped estimates eleven times (91%) and missed once (8%). In the last quarter, the company reported EPS of $0.88 per share, topping estimates of $0.84 per share.
Revenue: The company is expected to report revenue of $6.22 billion in Q3 2021, representing a 14% increase from the same period a year ago. When the company released Q2 2021, revenue management guided revenue of $6.15 to $6.25 billion for the third quarter. In Q2, the company reported revenue of $6.24 billion, but net profit was down 23% from Q2 2020.
Stock movement: Since the last earnings release, PayPal shares have lost 14.4%. The stock has been UP 13 times out of the last 21 quarters after the earnings release. So, the historical price reaction suggests a 61% probability of the share price going UP once PayPal releases Q3 2021 earnings. According to the Stockearning algorithm, the predicted first-day move is 5%, while the expected move on the seventh day is 6%.
What analysts are saying
Credit Suisse analyst Timothy Chiodo says there is merit in PayPal’s move to acquire Pinterest as the companies seek to combine and pursue commerce prospects. However, the analyst believes the rationale of the acquisition relative to the establishment of a partnership is not clear. According to Chiodo, the advantage for PayPal has to do with the large Pinterest user base of 454 million monthly active users and the possibility of adding more international users. However, Chiodo further said that the acquisition presents execution risks and introduces more complexity.
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