PayPal Holdings, Inc.

PYPL Details

Issuance of $5 billion Senior Notes:PayPal Holdings, Inc. (NASDAQ: PYPL) is a leading technology platform and digital payments company, enabling digital and mobile payments on behalf of consumers and merchants worldwide.The PayPal platform empowers more than 286 million consumers and merchants across 200 markets. The PayPal platform includes brands like Braintree, Venmo, Xoom and iZettle, which enables consumers and merchants to receive money in more than 100 currencies, withdraw funds in 56 currencies and hold balances in respective PayPal accounts in 25 currencies.

Recently, the company notified that it is offering senior notes amounting $5.0 billion, consisting the followings:
 

(a) $1.0 billion aggregate principal amount of 2.200% notes due 2022,
(b) $1.25 billion aggregate principal amount of 2.400% notes due 2024.
(c) $1.25 billion aggregate principal amount of 2.650% notes due 2026 and
(d) $1.5 billion aggregate principal amount of 2.850% notes due 2029.
 

The management highlighted that the offering is likely to close on September 26, 2019. PYPL highlighted that funds from the above offering would be utilized for repayment of borrowings under its 364-day term loan credit facility and for general corporate expenses. A part of the fund will further be utilized for capital expenditures and possible acquisitions of businesses or assets and strategic investments.

Q2FY19 Financial Highlights for the period ended 30 June 2019: The companyreported its financial results for 2QFY19 wherein, the company posted a revenue of $4,305 million, up 12% on y-o-y basis while net income witnessed a robust growth of 56% on y-o-y to $823 million. During the quarter, the company reported an operating margin of 16.4% as compared to 14.8% during Q2FY18. Transaction revenue stood at $3,878 million, comprising ~90% of the total revenue and posted a growth of 17% on pcp basis. The company reported revenue from other value-added services at $427 million, down by 21% from Q2FY18. During the quarter, the business reported 286 million active clients, higher by 17% on pcp while Total Payment Volume came in at $172,359 million, up 24% y-o-y. The company reported Transaction Margin at 54.8%, improved from 54.2% in Q1FY19. Payment transactions per active account stood at $39 million, up 3% from last quarter while number of payment transactions came in at $2,973 million, up 5% q-o-q. In Q2FY19, the company reported technology and development expenses at $483 million as compared to $441 million in Q2FY18. Cash balance stood at $4,909 million along with total assets at $48,391 million and total equity at $16,139 million as on 30 June 2019.


Q2FY19 Performance Highlights (Source: Company Reports)

Outlook:For the third quarter FY19 guidance, the Management expects revenue to grow between 18% - 19% at current spot rates and 18% - 19% on an FX-neutral basis, to a range of $4.33 - $4.38 billion while GAAP diluted EPS is likely to come within the range of $0.32 - $0.35 and non-GAAP diluted EPS in the range of $0.69 - $0.71.

Stock Recommendation:The stock of PYPL is trading at $105.11 along with a market capitalization of ~$123.68 billion. The 52-week trading range of the stock stood at $74.66 to $121.48. The stock has generated a positive return of 2.43% and 10.84% in the last three-months and six-months, respectively.While the stock has corrected around 3.39% in the last six months.The stock is presently trading at a price to earnings multiple of 50.05x. Enterprise value to sales multiple for the stock stood at 6.9x on trailing twelve months (TTM) basis as compared to the industry median of 2.7x. The stock is available at a price to cash flow multiple of 25.4x on TTM basis as compared to the industry median of 5.4x. Considering the aforesaid facts along with premium valuations and current trading levels, we believe that most of the positives are factored in at the current juncture which lead us to suggest investors to book profit and recommend a ‘Sell’ rating on the stock at the current market price of $105.11, up 0.45% as on 23 September 2019.
 
 
 PYPL Daily Technical Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.