Why Paypal Holdings Inc (NASDAQ: PYPL) stock is going gangbusters today

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Paypal Holdings Inc (NASDAQ: PYPL) stock rose over 13% on May 7th, 2020 (as of  12:06 pm GMT-4; Source: Google finance) after the company said that trends were improving in April and beyond, as May 1 marked the company’s highest volume transaction day in its history. The company has missed the analysts’ expectations for the first quarter of FY 20 as the company experienced the impact of the COVID-19 pandemic in March. For the first quarter, the company has reported the net income of $84 million, down from $667 million in the year-prior quarter. The company had processed $191 billion in payment volume during the first quarter, which reflects an increase from $161.5 billion in the prior March quarter, while analysts were projecting for $195.2 billion. PayPal has processed $56 billion in peer-to-peer volume and $31 billion in Venmo volume. The company has processed $68 billion in total payment volume in April, which is an increase of 22% on a year-over-year basis. Revenue grew about 20% on a currency-neutral basis in April

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Moreover, the company had added 10 million net new active accounts in the first quarter for its core platform and added 10.2 million from Honey. PayPal has added 7.4 million net new active accounts in April, which is a new monthly record. May 1 marked the company’s largest single day of transactions in its history, beating out last year’s Black Friday and Cyber Monday.

PYPL in the first quarter of FY 20 has reported the adjusted earnings per share of 66 cents, missing the analysts’ estimates for the adjusted earnings per share of 75 cents, according to analysts surveyed by FactSet. This includes the 17-cent negative impact from a credit reserve the company is taking due to the macroeconomic climate through the Current Expected Credit Losses (CECL) standard. The company had reported the adjusted revenue growth of 13.5 percent to $4.62 billion in the first quarter of FY 20, missing the analysts’ estimates for revenue of $4.74 billion. Excluding the incremental reserves, the company’s operating margin would have been 24.7%, which means that it is more than 200 basis points better than Q1 last year. The company has generated free cash flow in the quarter of $1.3 billion.

For the second quarter, the company expects 15% revenue growth on a currency-neutral basis and 15% growth in adjusted earnings per share. The company also projects 15 million to 20 million net new active accounts for the quarter.

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