PayPal - Earnings? Should you worry? It has many positives

PayPal announced a fourth-quarter profit of $1.11 per share, missing predictions of $1.12 per share, on revenues of $6.92 billion, above expectations of $6.89 billion. PayPal also stated that it expects to earn between $4.60 and $4.75 per share in fiscal 2022, less than the $5.25 predicted.

In November, the payments business said it expected to earn $1.12 per share in the fourth quarter, significantly below estimates of $1.28, while guiding sales to $6.85 billion to $6.95 billion, well below projections of $7.24 billion. While sales were within that range, profits fell short.

PayPal CEO Dan Schulman was upbeat in the company’s earnings release. “2021 was one of the strongest years in PayPal’s history,” he said. “We reached $1.25 trillion in [total payment value, or] TPV and launched more products and experiences than ever before. The future is moving in our direction, and we are investing in our consumer and merchant capabilities to seize the opportunity.”

There are many positives to PayPal’s earnings report:

  • 18% revenue growth
  • 13% growth inactive accounts
  • 38% growth in payment volume outside of eBay
  • 9% growth in FCF
  • Crypto Innovation!

Paypal has been diversifying its revenues away from eBay. Increasing its focus on Venmo and QR codes has considerably aided the company’s revenue growth outside of eBay.

To add that PayPal is still the most accepted digital wallet out there!

There are reports that PayPal should acquire RobinHood; M&A are a great way to expand PayPal’s business.

Excellent quarter. I’m not concerned about the eBay impact disappearing. It’s more difficult to delight investors at these high values. Given their growth rate, the 17% drop in their stock price will allow the business to trade at a more acceptable price.

On a side note, it would have been much better if the Pinterest deal had been completed…

PayPal, in my opinion, is a terrific corporation with excellent future exposure to cryptocurrency without really purchasing cryptocurrency.

I wouldn’t be surprised if Cathie Wood buys more PayPal shares considering that she highly values digital wallets.

I was looking at Cathie Wood’s analysis; many users posted this image from the report on Twitter:

The image is from the Ark Invest report in 2020 - Their Big Ideas one; this snapshot talks of Digital Wallets…

Let’s presume Cathie Wood believes each user to bring around $900 in revenue:

It implies more than 400M people would use the wallet if everyone were using PayPal as their main wallet…

If Cathie woods believes that each digital wallet is worth around $20K…

In that instance, PayPal would have $9,500,000,000,000 (or $9.500 trillion) in its account by the time the digital wallet revolution has matured.

Because of the 17 per cent drop in the PayPal share price (due to earnings), PayPal is now valued at $170,438,990,000, or $170.4 billion. PayPal, in her opinion, has a lot more potential than what short and medium-term investors envision.

That implies Paypal will be worth $9T in the future!

Trying my hands-on with the analysis, do tell me your opinion!

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Wow! Isn’t it over-optimistic? Like Cathie Wood is as far as I’ve come across, PayPal is a great business.

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Bonjour, it is, just like to drag out the ideas and play with it, just to point out what if people sell their shares just cause of a bad earnings report

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