PayPal: Record Q1 Results, Higher Full-Year Outlook (Preview)

Company Update (PYPL US) (Buy)

Summary

• PayPal released record Q1 2021 results overnight (Wednesday), sending shares up 4.3% in after-hours trading.

• Revenue growth in Q1 was 31%, 3 ppt ahead of previous guidance; EBIT margin expanded again and EPS grew 84% year-on-year.

• PayPal has seen continuing strong consumer adoption, even in countries that have begun to re-open, and raised its FY21 outlook accordingly.

• Q1 saw further progress in Buy Now Pay Later, QR codes, Venmo credit cards and crypto, and a new global agreement with Alibaba.

• The Upside Case gives a total return of 78% (17.1% annualized) by 2024; the Downside Case gives a 7.1% annualized return. Buy.

Why is PayPal Stock Up Today?

PayPal released their Q1 2021 results after markets closed last night, with earnings and outlook both exceeding expectations, sending PayPal stock up 4.3% in after-hours trading to $258.10.

PayPal has been Buy-rated in our coverage since May 2020. For the background to our investment case, see the preview ("PayPal: 20% Down From Peak, Attrac…