PayPal Shares Jump on Elliot’s $2 Billion Stake, Annual Earnings Expectation Boost

The PayPal app logo on a mobile phone in this illustration photo from Oct. 16, 2017. REUTERS/Thomas White/Illustration

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Aug 2 (Reuters) – Shares of PayPal Holdings (PYPL.O) rose in expanded trading Tuesday after it said Elliott Investment Management had an investment of more than $2 billion in the company and also raised its annual profit expectations.

Shares of PayPal shot up nearly 12% after market close, thanks to Elliot becoming one of the largest shareholders and the company raising its adjusted earnings estimates to between $3.87 and $3.97 per share for the year. an increase from the earlier forecast of $3.81 and $3.93 .

The fintech firm has “an unparalleled and industry-leading footprint in its payments business,” said Jesse Cohn, a managing partner at Elliot, a day after the investment firm disclosed a similar stake in Pinterest Inc (PINS.N). read more

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One of the major gainers during the pandemic, PayPal saw stocks wipe out more than 70% of their market value in a year as e-commerce growth pulled back from its pandemic-era records.

“Investors may view additional business challenges as supportive of the activist’s ability to drive change at PayPal, which could help create a floor under the stock,” said Jason Benowitz, senior portfolio manager at Roose Investments.

Decades of high inflation and aggressive rate hikes have weighed on consumer confidence, which has fallen to a recent low as people cut spending to save more.

The company reported lower adjusted earnings of 93 cents per share for the three months ended June 30, compared to $1.15 per share a year earlier, but surpassed estimates of 86 cents.

The company also announced a slew of measures, including the appointment of Blake Jorgensen as Paypal’s new Chief Financial Officer and a new $15 billion buyback program. Blake, who will take over the role on Wednesday, will switch to PayPal from Electronic Arts (EA.O).

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Reporting by Mehnaz Yasmin in Bengaluru; Editing by Krishna Chandra Eluri

Our Standards: The Thomson Reuters Trust Principles.

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