PYPL shares on “road to recovery” backed by Elliott management?

Participate in PayPal Collectibles (PYPL) appeared on Wednesday after the company said it was willing to work 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.

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PayPal reported earnings for the June quarter late Tuesday. PayPal’s second-quarter earnings were lower than the previous year but topped views as total payment volume missed estimates.

Also, PayPal confirmed that hedge fund Elliott Management has taken $2 billion from the company.

PYPL Stock: Elliott Management Spurs Lower Costs and Larger Repurchases

In its second-quarter earnings call with analysts, PayPal said the company and Elliott Management “are aligned with the shared goal of maximizing shareholder value, with an initial focus on improving profitability and increasing return on capital.” PayPal has entered into an information sharing agreement with Elliott Management.

PayPal plans to save $900 million in cost-cutting moves in 2022 and $1.3 billion in 2023.

PayPal, based in San Jose, California has announced the appointment of Blake Jorgenson as its new Chief Financial Officer. Jorgenson was the executive vice president of special projects for the video game company electronic arts (EA).

“With more reasonable high guidance, a respected new CFO, and Elliott helping manage cost cutting/capital allocation initiatives, PYPL stock is finally on the path to recovery,” Deutsche Bank analyst Brian Keane said in a report.

At Susquehanna, analyst James Friedman said in a report: “From an expense discipline perspective, PayPal has committed to margin expansion in the fourth quarter of 2022 and 2023. We believe these initiatives will underpin long-term earnings strength.”

PYPL stock jumped 12.7% to close to 101 in early trading in stock market today. In the regular Tuesday session, PayPal stock rose 1.2%.

PayPal’s earnings for the quarter ended June 30 were 93 cents a share, down 19% from a year earlier. The e-commerce company said revenue rose 10% to $6.8 billion.

Analysts expected PayPal earnings of 87 cents per share on revenue of $6.78 billion. A year ago, PayPal earned $1.15 per share on $6.24 billion in sales.

PayPal Stock: Payment Volume Light

In the second quarter, total volume of payments processed from commercial customers increased 13% to $339.8 billion. Analysts had expected the total volume of payments to be 342.83 billion dollars.

For the current quarter ending in September, PayPal expected earnings per share of 95 cents, in line with estimates. PayPal forecast revenue of $6.8 billion, below estimates of $7.02 billion.

“In defiance of bears who had been anticipating further cuts to guidance, management left its 2022 guidance largely the same, adjusting revenue growth to the lower end of the range (+11%), but increasing revenue,” said Lisa Ellis, analyst at Moffett Nathanson. slightly lower earnings per share. a report.

With e-commerce booming during the coronavirus pandemic, shares in PayPal have soared. But PayPal stock is down about 71% from its all-time high of 310.16 on July 26, 2021.

according to IBD stock check.

ex-parent ebay (ebay), which separated from PayPal in 2015, transferred payment processing from PayPal to Adyen in the Netherlands.

If you are new to IBD, consider taking a look at stock trading system And the CAN SLIM Basics. He distinguishes chart patterns For issues like PYPL stock is one key to investment guidance.

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