PayPal
PayPal's recent earnings report and stock price confirm its momentum. The stock finished 7% higher after a strong report in which the company's profit tripled from last year. It's also benefited from the introduction of crypto trading to its platform which has led to an increase in user growth.
Inside the Numbers
In Q4, PayPal reported a $1.6 billion profit which was a nearly 200% increase from 2019's Q4 profit of $507 million. CEO Dan Schulman said it was the best quarter in the company's history with gains across multiple segments. Revenue came in at $6.1 billion which was a 23% increase from last year's $4.9 billion. It also topped analysts' expectations of $5.9 billion.
Total payment volume increased to $277 billion which was above expectations of $268 billion, while Venmo's total payment volume was slightly better than expected at $47 billion vs expectations of $46.6 billion. PayPal added 16 million new accounts for a total of 377 million, including 29 million merchant accounts. Venmo accounts increased by 32% to 70 million.
The company's recent introduction of crypto trading has been successful as those people buying crypto are logging into their accounts more frequently than those not holding any cryptocurrencies. The company also introduced a new feature that allows customers to split purchases into a payment plan which is also proving to be popular.
It's also focused on the increasing use of PayPal for payments in-store. Currently, it's accepted by 600,000 merchants and accounted for $20 billion in total payment volume.
The goal of these new products is to turn PayPal from a payments app into a super-app. In Asian countries where fintech use and adoption is higher, these apps are used by people to do their banking, investing, lending, and buying insurance and other financial products.
In terms of guidance for Q1, PayPal expects revenue growth of 28% and EPS to increase by 50%. This came in above analysts' expectations on both counts. For the full year, PayPal is forecasting 19% revenue growth and 17% earnings growth with 50 million new accounts. These figures also came in above expectations.
Stock Price Impact
PayPal's earnings were a homerun as shares gapped up to new, all-time highs. In the last three months, shares are almost 50% higher. This is especially interesting for a company with a market cap that is now above $300 billion.
In light of PayPal's results, analysts have been aggressively hiking their price targets and expectations for future revenue and earnings. PayPal's crypto is a big deal as it basically brought more people to the platform and increased engagement. In essence, it made PayPal's flywheel stickier and spin faster which is already yielding results in the short-term but in the long-term should lead to a sharper trajectory.
