Shares in PayPal Credits (PYPL) rose on Wednesday after the company said it was open to working with activist investor Elliott Management. The e-commerce company added $15 billion to its PYPL share buyback program when it reported mixed financial results for the June quarter.
PayPal released its June quarter results on Tuesday. Second-quarter earnings for PayPal shares fell from a year earlier, but topped views as total payments volume missed estimates.
Additionally, PayPal confirmed that hedge fund Elliott Management had taken a $2 billion stake in the company.
Stock PYPL: Elliott Management spurs cost-cutting and bigger buyback
During the second-quarter earnings call with analysts, PayPal said the company and Elliott Management “are aligned on the common goal of maximizing shareholder value, with the initial focus on improving the profitability and increased return on capital”. PayPal has entered into an information sharing agreement with Elliott Management.
PayPal expects to save $900 million in cost-cutting measures in 2022.
PayPal, based in San Jose, Calif., has announced the appointment of Blake Jorgenson as chief financial officer. Jorgenson had been executive vice president of special projects at a video game company electronic arts (EA).
“With a more reasonable high-level forecast, a well-regarded new CFO and Elliott helping to manage cost-cutting initiatives/capital allocation, PYPL stock finally appears to be on the road to recovery,” it said. Deutsche Bank analyst Bryan Keane in a report.
At Susquehanna, analyst James Friedman said in a report, “From a spend discipline perspective, PayPal is committed to expanding margins in the fourth quarters of 2022 and 2023. We believe these initiatives will support earnings power. long-term.”
PYPL stock jumped 12.7% to near 101 in early trading on the stock market today. In Tuesday’s regular session, PayPal stock rose 1.2%.
PayPal’s profit for the quarter ended June 30 was 93 cents per share, down 19% from a year earlier. The e-commerce company said its revenue rose 10% to $6.8 billion.
Analysts had expected PayPal to earn 87 cents a share on revenue of $6.78 billion. A year earlier, PayPal earned $1.15 per share on sales of $6.24 billion.
PayPal Stock: light payment volume
In the second quarter, the total volume of payments processed by merchant customers increased by 13% to $339.8 billion. Analysts had forecast a total payment volume of $342.83 billion.
For the current quarter ending September, PayPal was forecasting EPS of 95 cents, in line with estimates. PayPal forecasts revenue of $6.8 billion, below estimates of $7.02 billion.
As e-commerce boomed during the coronavirus pandemic, PayPal shares soared. But PayPal stock had plunged about 71% from an all-time high of 310.16 on July 26, 2021.
PayPal stock holds a relative strength rating of just 13 out of the best possible 99, according to IBD Stock Check.
former relative eBay (EBAY), which founded PayPal in 2015, moved its payment processing from PayPal to Netherlands-based Adyen.
If you’re new to IBD, consider taking a look at its stock trading system and The basics of CAN SLIM. Recognize chart templates for issues such as PYPL shares is one of the key investment guidelines.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
YOU MIGHT ALSO LIKE
Bear market news and how to handle a market correction
Best Growth Stocks to Buy and Watch: See IBD Stock List Updates