Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why PayPal Holdings Inc. Stock Popped 12.4% in August

By John Ballard - Sep 5, 2018 at 3:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A strong earnings report was icing on the cake for what has already been a stellar year for the digital payments leader.

What happened

Shares of PayPal Holdings ( PYPL -1.72% ) continued their upward trajectory last month, following another stellar earnings report toward the end of July. The stock gained 12.4%, according to data provided by S&P Global Market Intelligence.

To be clear, there was no news out of the company in August. Nonetheless, the stock continued to surge last month as investors are getting increasingly bullish on the long-term prospects of top e-commerce stocks. PayPal's exceptional second-quarter earnings report, as well as the implications of recent acquisitions, gave investors more reasons to jump on board.

Smartphone with PayPal app displayed lying next to a PayPal-branded credit card, a passport, sunglasses, ear buds, and a camera.

Image source: PayPal Holdings.

So what

PayPal's shares began the year flat but started gaining momentum after a string of positive news announcements. After a solid first-quarter earnings report, management made three acquisitions, spending a total of $2.7 billion in just over a month that showed executives are aggressively putting the company's extra cash to work to cement its lead in the global payments market.

The purchase of iZettle over the summer was the most notable of these. It will make PayPal a major player in point-of-sale solutions for small businesses in international markets like Europe and Latin America. Between the month of May and the announcement of second-quarter earnings in late July, the stock gained 22%. 

PYPL Chart

PYPL data by YCharts.

The second-quarter report continued to build investor confidence in PayPal's ability to keep growing at high rates for a long time. Revenue grew 23% year over year, an acceleration over the year-ago quarter's 18%. Even though PayPal is very consistent in its performance, analysts still can't keep up with the company's pace of growth, as PayPal managed to beat Wall Street's already high expectations on the bottom line. Non-GAAP earnings per share climbed 28% to $0.58, beating the consensus analyst estimate by $0.01. 

Now what

It's no wonder investors keep buying PayPal shares. PayPal's accelerating growth over the last year coupled with management proactively going after opportunities to fill out its payments platform positions the company as a force to reckon with in the multitrillion-dollar global commerce market over the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PayPal Holdings, Inc. Stock Quote
PayPal Holdings, Inc.
$183.93 (-1.72%) $-3.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.