PayPal stock price: what to expect from first quarter earnings

PayPal Holdings Inc (Nasdaq: PYPL) share price drops to US $ 250.16 per share
Ebitda for 1Q could jump 49%, Wall Street forecasts on average
Share price could reach US $ 314.19 in the next year, analysts target
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PayPal share price: will it rebound?

Fintech giant PayPal’s share fell 3.5% more overnight to end Tuesday (May 4, 2021) at US $ 250.16, on volume of around 9.2 million shares .

Since the market closed last Wednesday (April 28, 2021), PYPL shares have lost 7.7%, ahead of the news of the online payment company’s first quarter results.

During the first half of April, the counter rebounded 13%, from US $ 242.84 at the end of March to US $ 275.43 on April 13, 2021.

Since the start of the year, the stock is up 6.8%, after a volatile performance in recent months.

Bloomberg data showed analysts remained largely bullish on PayPal stocks, with 46 recommending “ buy, ” five saying “ hold ” and a single call calling “ sell ” on Tuesday. Their 12-month average target price was US $ 314.19 per share.

What do analysts expect from PayPal’s revenue?

On Wednesday (May 5, 2021) after the market closes, PayPal will release its results for the first quarter of 2021.

The Wall Street consensus is that earnings per share will increase 53% year-on-year to US $ 1.01 for the quarter, according to estimates compiled by Bloomberg.

Revenue could rise to $ 5.88 billion, up 27% from a year earlier, while EBITDA is likely to rise 49% to $ 1.62 billion, analysts said.

The Bloomberg Intelligence (BI) research team noted that the consensus estimates for PayPal’s revenue growth were slightly lower than the company’s forecast and “ leaves room for maneuver upwards. ”

The outlook for this whole year could increase, given what PayPal CEO Daniel Schulman described as a strong pull in the new cryptocurrency payments business, BI added.

The forecast of a 39% increase in payment volumes for Q1 2021 is in line with the Q4 2020 rate, and “ should reflect easier year-to-year comparisons and the impact of stimulus checks. on balances and user transactions, ” the BI analysts wrote. .

They also anticipate “ incremental growth ” due to better-than-expected crypto trading fees, a larger share of the merchant checkout aided by Buy Now Pay Later, and new in-store revenue with more merchants. accepting QR code payments.

What are the potential drawbacks?

Valens Research wrote that PayPal has historically “seen robust but declining profitability.”

Management may also lack confidence in its ability to reinvent the next generation of the facial system, build on strong business momentum and improve revenue from value-added services, Valens analysts added.

In addition, there are concerns about declining travel and event verticals and their impact on revenue growth in the United States, according to Valens.

Risks to the analyst consensus include an increase in spending above the 19% estimate amid aggressive new product plans, BI said. There could also be a faster reduction in eBay volume, which is expected to cost 400 basis points of growth this year.