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PayPal Plunges on Weak Guidance: ETFs in Focus

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PayPal (PYPL - Free Report) shares fell 10.5% on Nov 9 on mixed earnings and weak forward guidance. The company came up with quarterly earnings of $1.11 per share, beating the Zacks Consensus Estimate of $1.07 per share. This compares to earnings of $1.07 per share a year ago.

This technology platform and digital payments company which belongs to the Zacks Internet - Software industry, posted revenues of $6.18 billion for the quarter ended September 2021, missing the Zacks Consensus Estimate by 0.47%. This compares to year-ago revenues of $5.46 billion.

PayPal also announced a new deal with Amazon to allow U.S. customers pay with Venmo at checkout, starting next year.

Weak Guidance

For the fourth quarter, PayPal sees adjusted earnings of $1.12 per share on net revenues of between $6.85 billion and $6.95 billion. Analysts surveyed by Refinitiv had expected $1.27 in adjusted earnings per share on $7.24 billion in revenues, per a CNBC article. The revenue guidance for the year was revised down to 18%, putting it in the range of $25.3 billion to $25.4 billion. Analysts had expected $25.78 billion.          

The company said on the call that revenues for the year will increase about 18%, which would equal full-year sales of close to $30 billion. Analysts were projecting revenues of $31.6 billion, according to FactSet. PayPal highlighted supply chain constraints as well as general concerns around the economy and spending habits.

While the stock gained right after the earnings release as investors paid more attention to the Amazon deal than on fourth-quarter guidance, the shares nosedived when PayPal started discussing fiscal 2022.

ETFs in Focus

PayPal was a winner of the pandemic’s stay-at-home trend. However, with the economic reopening taking an uptrend, PayPal has lost steam this year. Still, if anybody is willing to buy the dip in PayPal, the below-mentioned ETFs could be safe options. The latest dip in PayPal shares can be a winning opportunity to enter into some ETFs that are heavy on PayPal. While PayPal has a Zacks Rank #4 (Sell), several of the below-mentioned ETFs have a Zacks Rank #2 (Buy).

ETFMG Prime Mobile Payments ETF (IPAY - Free Report) — 5.25% exposure

The underlying Prime Mobile Payments Index provides a benchmark for investors interested in tracking the mobile and electronic payments industry, specifically focusing on credit card networks, payment infrastructure and software services, payment processing services, and payment solutions. It charges 75 bps in fees.

Global X FinTech ETF (FINX - Free Report) — 4.32% exposure

The underlying Indxx Global FinTech Thematic Index invests in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions. The expense ratio is 0.68%.

iShares U.S. Industrials ETF (IYJ - Free Report) — 4.56% exposure

The underlying Russell 1000 Industrials 40 Act 15/22.5 Daily Capped Index measures the performance of the industrial sector of the U.S. equity market. It includes: construction & materials, aerospace & defense, general industrials, electronic & electrical equipment, industrial engineering, industrial transportation & support services. The Index is capitalization-weighted. The Zacks Rank #2 fund charges 41 bps in fees.

SPDR SSGA Gender Diversity Index ETF (SHE - Free Report) – Up 3.74%

The Zacks Rank #2 fund gives exposure to companies on the index that are ranked within each sector by three gender diversity ratios. The index seeks to minimize variations in sector weights compared to the composition of its broader investment universe by focusing on companies with the highest levels within their sectors of senior leadership gender diversity. The fund charges 20 bps in fees.