Paypal Holdings Inc (NASDAQ: PYPL) stock lost over 4.1% in the pre-market session of November 3rd, 2020 after the company forecasted fourth quarter profit below expectations.
For the third quarter of 2020, the company reported rise in net income to $1.02 billion for the quarter ended Sept. 30, from $462 million, a year earlier. The company has processed a total of $247 billion in payments in the third quarter, which is an increase of 36% from the year-earlier period, and added 15.2 million net new active customers. The company has recorded its all-time highest daily payments volume level in October, though the pandemic lockdowns have eased in many regions during the third quarter, though the momentum for digital payments continues.
PYPL in the third quarter of FY 20 has reported the adjusted earnings per share of $1.07, beating the analysts’ estimates for the adjusted earnings per share of 94 cents. The company had reported the adjusted revenue growth of 25 percent to $5.46 billion in the third quarter of FY 20, beating the analysts’ estimates for revenue of $5.43 billion.
For the fourth quarter, PayPal expects adjusted profit to grow in a range of 17% to 18%, which is below analysts’ estimated growth of about 24%, according to IBES data from Refinitiv. The company said it was on track to process just shy of $1 trillion in payments this year. Total payment growth is now projected to be approximately 30%, with revenue growth in a range of 20%-to-21% on an addition of 70 million net new accounts for 2020.
On the other hand, the company plans to will invest $50 million in eight early-stage, Black and Latinx-led venture capital funds: Chingona Ventures; Fearless Fund; Harlem Capital; Precursor Ventures; Slauson & Co.; VamosVentures; Zeal Capital Partners; and one additional fund. The investments are part of PayPal’s commitment to invest $530 million to support Black-owned businesses. PYPL intends to work collaboratively with these early-stage funds and, in some cases, invest directly in businesses through PayPal Ventures, which is the company’s venture capital arm. PayPal Ventures invests in series A through later funding rounds of startups in areas of strategic relevance to PayPal, including financial services, commerce enablement and payments infrastructure. PYPL will also begin offering a three-month fellowship to a Black or Latinx graduate student each semester, through which the PayPal Ventures team will provide coaching, training and mentoring.