PayPal’s third-quarter financial report was strong, with revenue continuing to grow at a rate of more than 20%. In addition, by the end of 2020, management plans to increase free cash flow to $5 billion and increase EPS by 27% to 28%. PayPal’s digital wallet Venmo is developing dynamically with total payments grew by 61%, while in 2021 management forecasts revenue growth to $900 million.
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Meanwhile, after the market closed, the company’s shares fell sharply, although there were no serious reasons for this. Apparently, investors were also unable to recognize that fall because of which the stock very next day next day came recovering most of the decline. There might be understanding issue for the investors as they might not be correctly identifying the potential the company bears with it.
On the one hand, PayPal could not boast of the figures that are typically observed by the investors in “growing” companies, but also the company could not be counted as mature one. In 2020, revenue growth accelerated at a growth rate of 25% in the third quarter, compared to that of 19% in the same quarter last year. For the fourth quarter of 2020, management has been expecting a growth of 23% which was 19% in the same quarter a year ago.
The major setback highlighted by the quarterly performance is might be the decline in company’s free cash flow. In the third quarter, company’s free cash flow remained $489 million against a free cash flow of $923 million the company has in the same quarter of the last year. However, if management succeeds in coming up to its expectations for the final quarter of 2020, then it will be setting off the weakness of the recent quarterly performance.
At last check on Wednesday the company’s stock was up 5.91% at $190.44.
