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Why PayPal Stock Soared 58% in May

By Joe Tenebruso – Jun 7, 2020 at 11:00PM

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The online payments leader is benefiting from the growth of digital transactions.

What happened

Shares of PayPal (PYPL -0.79%) jumped 26% last month, according to data from S&P Global Market Intelligence, following the release of the financial technology company's strong first-quarter results. 

So what

PayPal added more than 20 million net new active accounts, including the 10.2 million it obtained from its $4 billion acquisition of online savings platform Honey in January. That helped PayPal's total payment volume rise by 18%, which, in turn, fueled a 12% increase in revenue, to $4.6 billion.

A person is holding an upwardly sloping digital chart.

PayPal's payment platform is growing at an impressive rate. Image source: Getty Images.

Better still, PayPal also continues to strengthen its cash flow metrics. Its operating and cash flow improved by 46% and 60%, respectively, to $1.5 billion and $1.3 billion.

"As our platform sees record increases in both new customer accounts and transactions, it is clear that PayPal's products are more important and relevant than ever before," CEO Dan Schulman said in a press release.

Now what

These strong results -- along with promising trends in April -- bode well for PayPal and its investors. The digital payments leader expects to deliver another impressive performance in the second quarter, including revenue growth of approximately 13% and adjusted earnings-per-share growth of 15% to 20%.

"The strength of our customer value proposition combined with the acceleration of digital payments adoption significantly accelerated in April, with increased demand and engagement," Schulman said.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends PayPal Holdings and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.

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PayPal Holdings, Inc. Stock Quote
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