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PayPal Stock Hits New Highs As Q4 Results Beat Estimates

PayPal Video 04.02.21.

PayPal Continues To Grow At A Fast Pace

PayPal shares managed to get to all-time high levels after the release of the company’s fourth-quarter earnings report. PayPal reported revenue of $6.12 billion and GAAP earnings of $1.32 per share, beating analyst estimates on both earnings and revenue.

For PayPal, the year 2020 was the strongest year in its history as it benefited from the trends accelerated by the pandemic. PayPal’s total payment volume grew by 31% in 2020, while revenue increased by 21%. The company also managed to add 16 million net new active accounts (NNAs).

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The rapid digitalization of the world served as a major tailwind for PayPal’s business in 2020. This trend is also projected to boost the company’s performance in 2021.

The company expects that its revenue will grow by about 19% in the current year while its adjusted earnings will increase by about 17%. PayPal also expects to add 50 million NNAs as its business continues to grow. Judging by today’s trading dynamics, the market believes that these targets are realistic.

What’s Next For PayPal?

The digitalization trend, which was accelerated by the pandemic, will likely remain strong in the upcoming years, and digital payments firms like PayPal will benefit from this trend.

Currently, analysts expect that PayPal will report earnings of $4.54 per share in 2021, and the stock is trading at a forward P/E of more than 55. The rich valuation is based on market’s expectation of the rapid growth of PayPal’s revenue, earnings and customer base.

If the upcoming earnings reports indicate that this growth is weaker than expected, PayPal shares may find themselves under pressure. In the near term, the stock may continue to attract investors who want to bet on the strong digitalization trend.

In addition, PayPal has recently became more friendly to the cryptocurrency world, which may serve as an additional bullish catalyst in case cryptocurrency market shows strong performance in 2021.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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