PayPal: How US investor Paul Singer is now pushing PayPal shares

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by Klaus Schachinger, Euro on Sunday

PPaul Singer puts PayPal in the spotlight. His New York hedge fund Elliott Management recently bought shares in the popular payment service for two billion dollars. The first rumors about the participation of the activist investor already gave the share a significant boost on the stock exchange. At the low of around 67 euros at the end of June, PayPal had lost almost 75 percent of its value to the all-time high of July 2021. Singer’s hedge fund is now said to be discussing value-enhancing measures with the management of the payment service provider from San Jose, California. The stock is up almost 30 percent from its low.

With the new bustling major shareholder on board, PayPal CEO Dan Schulman should be relieved that the balance sheet for the second quarter was better than analysts had expected. Adjusted for the net loss in PayPal’s investment portfolio and a tax payment, the Californians earned 93 US cents per share in the quarter, analysts had expected an average profit of 87 US cents. Sales of $6.8 billion were in line with expectations. In addition, the number of customer accounts rose by six percent to 429 million.

In April, PayPal lowered its revenue and profit forecasts for the fiscal year due to the negative impact of inflation on its customers’ transaction volume. The fact that boss Schulman now introduced Blake Jorgensen, the new chief financial officer of the fintech group, whom the Californians have poached in the same function from the video game developer Electronic Arts (EA), should have pleased shareholder Elliott Management, just like the share buyback program worth 19 billion dollars.

Market potential significantly increased

Thanks to its brand and the trust bonus of customers, many of whom know the service provider from earlier times as a subsidiary of the online auctioneer eBay, PayPal is still number 1 worldwide for payments in online trade and for money transfers between users. And PayPal now has its offer with cryptocurrencies, Buy-now-pay-later services and contactless payment greatly expanded.

The Californians have “more than doubled” the potential market volume for themselves, says Bloomberg analyst Julie Chariell. Bloomberg expert Chariell believes that if PayPal customers can still be persuaded to use the new super app more extensively and more intensively, the fintech group would be much less dependent on expanding its customer portfolio than it has been up to now.

Turbo: Since the low in June, the share price has gained almost 30 percent. The trend is likely to continue with the new major shareholder.

Notice of Conflicts of Interest:The deputy editor-in-chief of €uro am Sonntag, Mr. Stephan Bauer, has taken direct and indirect positions on the following financial instruments mentioned in the publication or related derivatives that can benefit from any price development resulting from the publication: Paypal.

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