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Portfolio Strength to Benefit PayPal's (PYPL) Q1 Earnings

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PayPal Holdings, Inc. (PYPL - Free Report) is slated to report first-quarter 2021 results on May 5.

Notably, the company’s robust services have been enabling it to maintain a deep and trusted relationship with merchants and consumers. Moreover, its two-sided platform helps in developing direct financial relationships with customers and merchants.

The Total Payment Volume (TPV) for the first quarter is anticipated to reflect the impacts of all the factors. Notably, TPV is a key growth metric for PayPal’s top line.

TPV in the last reported quarter improved 39% and 36% year over year on spot rate and a currency-neutral basis, respectively, to $277.1 billion. This can be attributed to well-performing Venmo, which accounted for more than $47 billion of TPV.

For first-quarter 2021, the Zacks Consensus Estimate for TPV is pegged at $268.02 billion, suggesting growth of 40.6% on a year-over-year basis.

Click here to know how the company’s overall first-quarter performance is likely to have been.

Square, Inc. Revenue (TTM)

 

Square, Inc. Revenue (TTM)

Square, Inc. revenue-ttm | Square, Inc. Quote

Portfolio Strength: A Key Catalyst

PayPal’s continuous efforts toward strengthening the services portfolio are likely to have aided the company in gaining traction across customers in the first quarter despite the pandemic.

In the first quarter, the company unveiled the Cash a Check feature in the Venmo app, which enables users to cash their government stimulus paper check quickly and securely via the Venmo app.

Further, PayPal rolled out a feature called Checkout with Crypto to bolster its offerings in the booming cryptocurrency space. Notably, the new feature allows customers to convert their cryptocurrency holdings seamlessly into fiat currency at checkout. This is likely to have helped the company in delivering an enhanced user experience to customers.

Apart from these, the company’s first-quarter results are expected to reflect strength in product lines, including Venmo and One Touch.

The company’s TPV is likely to have benefited from Venmo’s growing monetization efforts. Further, One Touch’sgrowing momentum across merchants on the heels of its robust mobile checkout services is expected to have driven growth in PayPal’s mobile TPV in the first quarter.

Further, Venmo and One Touch are expected to have contributed to growth in the company’s net new active accounts. Further, the products are known for accelerating customer engagement on PayPal’s platform, which is expected to have bolstered total active accounts in the to-be-reported quarter.

Furthermore, the company’s diversified global platform is anticipated to have been a major positive. It has been witnessing activations across fashion, gaming, food and services verticals in several markets, which is expected to get reflected in the company’s first-quarter results.

Zacks Rank & Stocks to Consider

Currently, PayPal carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are KLA Corporation (KLAC - Free Report) , Vishay Intertechnology, Inc. (VSH - Free Report) and Waters Corporation (WAT - Free Report) . All three companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rates of KLA, Vishay and Waters are pegged at 14.03%, 20.26% and 8.85%, respectively.

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