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Why PayPal Stock Rose to a New All-Time High Today

By Joe Tenebruso – Jul 30, 2020 at 6:30PM

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The digital payment leader is a major beneficiary of the global trend away from cash.

What happened

Shares of PayPal Holdings (PYPL -2.96%) climbed 4.3% to a new closing high of $192.51 on Thursday, following the online payment processing giant's strong second-quarter results. 

So what

PayPal's total payment volume jumped 29% to $222 billion, while its revenue leapt 22% to $5.3 billion. The gains were fueled in part by a surge in e-commerce sales during the COVID-19 crisis, as stay-at-home orders and other social distancing guidelines drove more people to shop online than ever before.

"In the midst of the COVID-19 pandemic, digital payments have become more important and essential than ever," CEO Dan Schulman said in a press release. "Our record performance in the second quarter -- our strongest quarter ever -- reaffirms the relevance of PayPal in the unfolding digital future."

A person is pointing to an upwardly sloping digital chart.

PayPal's stock hit a record high on Thursday. Image source: Getty Images.

Better still, PayPal is growing more profitable as it expands its revenue base. Its adjusted operating income and earnings per share both surged 49%, to $1.5 billion and $1.07. PayPal's cash flow generation was even more impressive; its operating and free cash flow soared 103% and 112%, respectively, to $2.4 billion and $2.2 billion.

Now what 

PayPal is clearly one of the winners in the migration away from cash and toward digital transactions. COVID-19 is only serving to accelerate this global trend, and PayPal is doing its best to make the most of its current opportunities.

"This is our time," Schulman said during a conference call with analysts. "We intend to seize the moment." 

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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