PayPal upbeat ahead of Q3 earnings as buyouts continue to pay off

Not many Wall Street companies have managed to scale up their operations with such efficiency as PayPal (PYPL) did in recent years, through a strategic expansion program with focus on acquisitions. Of late, the company has been on an investment spree, broadening its empire through back-to-back acquisitions.

Wall Street expects PayPal to continue the winning streak in the third quarter, benefitting from the robust payment growth and sustained customer engagement. The company is expected to report earnings is $0.54 per share, marking a 17.4% annual growth, when it announces third-quarter results on October 18 at 4:15 PM. Revenues are seen growing by 13.2% to $3.67 billion. Recent buyouts and the resultant portfolio expansion are expected to reflect in the results.

Wall Street expects PayPal to continue the winning streak in the third quarter, benefitting from the robust payment growth and sustained customer engagement

Underscoring reports that competition is growing in the sector, PayPal is currently facing a challenge from its former parent eBay (EBAY), which is doing the groundwork to develop its own payment system. However, a section of market watchers believes the present softness is temporary, and predict significant growth opportunities going forward.

Also see: PayPal Q2 2018 earnings call transcript

In the second quarter, PayPal’s earnings jumped 28% to $0.58 per share aided by a 23% revenue growth, both beating analysts’ forecast. Total payments volume (TPV) rose 29%, while the number of net new active customers advanced 18% to 224 million.

In September, the San Jose, California based fintech firm acquired iZettle, a provider of small business tools and payments, for $2.2 billion – the latest in a series of acquisitions aimed at enhancing its digital prowess. Earlier, PayPal deepened its existing tie-up with Uber to make the Venmo service available on the ride-hailing platform.

PayPal’s stock tumbles despite earnings beat

Last week, the company signed a partnership with Walmart (WMT) to make the ‘cash in and cash out’ service available to the latter’s customers, in a first-of-its-kind deal of that sort between a payment solutions firm and a brick-and-mortar store.

PayPal shares reached a peak in early September after registering an 18% growth since the beginning of the year. The stock, which has been on a downward spiral since then, traded lower during Monday’s regular session.