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Why Investors Are Pleased with PayPal

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Dec. 4 2020, Updated 10:42 a.m. ET

PayPal appreciating faster than eBay

PayPal (PYPL) has done very well since splitting from its parent, eBay (EBAY), two years ago, which is evident from its stock performance. The company has also continued to please investors. PayPal recently reported 2Q17 earnings that beat expectations and painted a rosy picture for 3Q17. The stock rose as a result.

When PayPal released its 2Q17 results on July 26, the stock had already climbed about 47.6% since the beginning of the year. The stock had also risen more than 30% since its last quarterly earnings report on April 26. In contrast, eBay stock had climbed about 25% since the beginning of the year when it reported its most recent quarterly results. It rose less than 10% between its 1Q17 and 2Q17 reports.

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PayPal blows past expectations

PayPal posted adjusted EPS (earnings per share) of $0.46 in 2Q17, outpacing consensus estimates that called for adjusted EPS of $0.43. Revenue of $3.14 billion also topped consensus estimates of about $3.1 billion.

Mobile continued to be a star of PayPal’s growth story. The company said that its mobile payment volumes rose 50% to $36 billion. PayPal’s youth-oriented mobile money transfer service, Venmo, also continued its robust growth with volumes growing 103% over a comparable period last year.

PayPal is facing off with Square (SQ), the other company run by Twitter (TWTR) CEO Jack Dorsey, in the peer-to-peer money transfer business.

Strong 3Q outlook

PayPal is expecting 3Q17 adjusted EPS to come in in the range of $0.42 to $0.44. The midpoint of the company’s guidance is above the consensus estimate of $0.42. The company guided current quarter revenue in the band between $3.14 billion and $3.19 billion, which places it on the path to exceed consensus estimates of $3.13 billion.

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