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PayPal, Align Light Up the Stock Market After Hours

By Dan Caplinger - Feb 3, 2021 at 5:37PM

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The broader market was largely flat, but earnings are moving stocks in a big way.

Wall Street enjoyed a quiet day on Wednesday, as major market benchmarks held on to their gains even after rising at a fevered pace to start the week. The Dow Jones Industrial Average (^DJI 0.00%) and S&P 500 (^GSPC 2.02%) managed to put up modest advances, while the Nasdaq Composite (^IXIC 0.00%) inched lower.

Index

Percentage Change

Point Change

Dow

+0.12%

+36

S&P 500

+0.10%

+4

Nasdaq Composite

(0.02%)

(2)

Data source: Yahoo! Finance.

This week is a critical one for earnings season, with many high-profile companies reporting their latest results. For PayPal Holdings (PYPL 2.70%) and Align Technology (ALGN 2.33%), strong results were enough to push their stocks higher in after-hours trading on Wednesday afternoon. Let's look more closely at what PayPal and Align had to say, and what it means for the broader market.

PayPal's in the money

Shares of PayPal climbed between 3% and 4% half an hour into the after-hours session. The fintech stock had risen just over 1% in the regular session.

PayPal's results were sensational. The company added 16 million new active accounts in the fourth quarter, up 72% from year-ago levels and bringing the total for 2020 to 72.7 million. That pushed revenue for the quarter up 23% and adjusted earnings by 29%. Total payment volume for the year soared by more than 30% even though travel-related activity nearly evaporated during the COVID-19 pandemic.

The future looks bright for PayPal. The company is looking to enhance its pay-later alternatives in an answer to companies like Affirm Holdings (AFRM 9.98%) and AfterPay, and it's also happy with the launch of its digital currency offerings. The company is still going to push to have cryptocurrency be a direct funding source across the its base of 29 million merchants.

Some had expected cryptocurrency initiatives to play a bigger role in PayPal's success, but if anything, the strength of its core business is even better news. The company hopes to add another 50 million accounts in 2021 and keep producing solid growth rates. Meanwhile, investors have high hopes that PayPal can keep profiting from the recovery in the global economy and see better days ahead.

Mouth of person smiling, showing teeth.

Image source: Getty Images.

Align makes shareholders smile

Align Technology shares did even better, jumping nearly 10% after hours. The maker of the Invisalign orthodontic appliance enjoyed record financial results for the fourth quarter and for the full year in 2020.

Align reported a 28% rise in quarterly revenue compared to year-earlier results, with volumes of its clear aligners rising 37% to 568,000 cases. Growth in the teenage segment continued to surpass overall gains, with Align getting roughly 30% of its case volume from teenage orthodontic patients. Even with the challenges of the pandemic, total sales for the year inched higher by 3%.

The U.S. market has been important for Align, but increasingly, overseas business is playing a more vital role. Align reached the 2 million mark in sales of Invisalign appliances to Europe, the Middle East, and Africa, and it sees heightened marketing to international patients throughout 2021.

Much of Align's success is due to engaging social media influencers to promote its use. With a pipeline of new products that will widen its addressable market and having built a connection with many young customers, Align has put itself in position to benefit from favorable trends in the dental industry not just in the immediate future but for years to come.

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Stocks Mentioned

PayPal Holdings, Inc. Stock Quote
PayPal Holdings, Inc.
PYPL
$79.75 (2.70%) $2.10
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$32,223.42 (0.00%) $0.00
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,088.85 (2.02%) $80.84
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,662.79 (0.00%) $0.00
Align Technology, Inc. Stock Quote
Align Technology, Inc.
ALGN
$280.59 (2.33%) $6.39
Affirm Holdings, Inc. Stock Quote
Affirm Holdings, Inc.
AFRM
$25.24 (9.98%) $2.29

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

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