PayPal Holdings Inc (PYPL)

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PayPal Beats Overall in Q3 Earnings, Outlook Up: ETFs to Tap
Sanghamitra Saha
Fri, November 3, 2023 at 6:00 AM MDT·3 min read

https://finance.yahoo.com/news/paypal-beats-overall-q3-earnings-120000185.html

One of the largest online payment solutions providers PayPal Holdings PYPL reported third-quarter non-GAAP earnings of $1.30 per share, which beat the Zacks Consensus Estimate by 6.56% and increased 20.4% year over year. Net revenues of $7.42 billion exhibited year-over-year growth of 9% on a FX-neutral (FXN) basis and 8.4% on a spot basis. The figure surpassed the Zacks Consensus Estimate by 0.37%.

Total payment volume amounted to $387.701 billion, reflecting year-over-year growth of 15% on a spot basis and 13% on an FXN basis. The figure topped the Zacks Consensus Estimate by 1.53%. The stock surged 6.6% on Nov 2, responding to the upbeat earnings results.

Quarter Details
Growing transaction and other value-added services’ revenues drove top-line growth on a year-over-year basis in the reported quarter. Transaction revenues were $6.654 billion (90% of net revenues), up 7% year over year. Other value-added services generated revenues of $764 million (10% of net revenues), up 25% year over year.

U.S. net revenues accounted for 57% of total revenues. The top-line figure increased 7% year over year to $4.257 billion. International revenues increased 10% on a spot basis and 11% on an FXN basis to $3.161 billion.

PayPal witnessed a year-over-year decline of 1% in total active accounts, which came in at 428 million in the quarter under review. The total number of payment transactions was 6.275 billion, up 11% on a year-over-year basis. Payment transactions per active account on a trailing 12-month basis were 56.6 million, which improved 13% year over year.

Raised Guidance
For fourth-quarter 2023, PayPal expects revenues to grow roughly between 6% and 7% on a spot basis and 7% to 8% on an FXN basis. Non-GAAP earnings are expected to grow roughly 10% year over year to $1.36 per share. For 2023, PayPal raised its guidance for non-GAAP earnings to $4.98 from $4.95, suggesting growth of roughly 21% over 2022.

More Upside in the Share Price Awaiting?
Based on short-term price targets offered by 29 analysts, the average price target for PayPal comes to $83.63. The forecasts range from a low of $60.00 to a high of $126.00. The average price target represents an increase of 61.89% from the last closing price of $51.66.

ETFs in Focus

Against this backdrop, one should keep a close tab on PayPal-heavy ETFs like Grayscale Future of Finance ETF GFOF, ETFMG Prime Mobile Payments Fund IPAY, Global X FinTech ETF FINX and Schwab Crypto Thematic ETF STCE for some modest gains. PayPal has weights in the range of 6.6% to 3.8% in the above-mentioned ETFs, respectively.