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News

PayPal’s shares rise after Q4 results

 

Monday, February 13, 2023, 8.45am GMT

The news shaping the markets today

Russia’s paramilitary group leader Wagner claimed to have captured an eastern Ukrainian town near the key town of Bakhmut. The US dollar index, which measures the greenback’s performance versus a basket of major peers, rose this morning.


Ireland’s BNP Paribas Real Estate Construction PMI improved to 47.7 in January, from December’s reading of 43.2. However, construction activity remaining in the contraction zone exerted pressure on the EUR/USD forex pair.


New Zealand’s BusinessNZ Performance of Services Index rose to 54.5 in January, versus 52.0 a month ago, which sent the NZD/USD pair higher in forex trading this morning.


Singapore’s economy expanded by 2.1% year-over-year in the fourth quarter, versus 4.0% growth in the prior quarter. The latest reading came in below market expectations of 2.3% and exerted pressure on the SGD/USD forex pair.


Indonesia’s motorbike sales climbed by 37.0% year-over-year to 608,244 units in January, compared a 24.6% increase in the previous month. However, the IDR/USD pair fell in forex trading this morning.

 

What’s happening: Shares of PayPal Holdings gained on Friday after the company released results for its fourth quarter.

What happened: PayPal guided to profits above Wall Street expectations for the full year and made an important announcement regarding its management.

Several analysts changed their price targets for the payments heavyweight on Friday.

How were the results: The San Jose, California-based company reported growth in sales for the recent quarter.

  • Revenue rose 9% on an FX-neutral basis to $7.4 billion, compared to the consensus estimates of $7.39 billion.
  • Earnings came in at $1.24 per share, which topped Wall Street expectations of $1.20 per share.

Why it matters: PayPal’s customers have continued spending despite inflation hitting decade-high levels. However, in an attempt to cut costs amid soaring inflation, the company recently announced plans to lay off 7% of its workforce, or about 2,000 employees.

PayPal’s total payment volumes rose 5% year-over-year to $357.4 billion in the fourth quarter, while full-year payment volumes grew by 9% year-over-year to $1.36 trillion.

PayPal’s CEO Dan Schulman announced plans to retire from the company on December 31, 2023. No successor has yet been named.

Management guided to revenue growth of 7.5% year-over-year and adjusted earnings of $1.08-$1.10 per share for the first quarter of 2023, higher than the consensus estimates of $1.07 per share. The company also projected adjusted earnings of around $4.87 per share for the full year, above market expectations of $4.75 per share.

Several analysts, including JP Morgan, Wells Fargo and Oppenheimer, raised their price targets for PayPal following the release of quarterly earnings. However, Piper Sandler reduced the price target from $85 to $82.

How shares responded: PayPal’s shares rose 3% to close at $80.80 on Friday following the release of quarterly results. The stock added around 0.1% in the after-hours trading session.

What to watch: Investors will keep an eye on rising inflation, which could impact consumer spending and weight on PayPal’s results.

The markets today

Crude oil will be in focus today after closing higher last week

Context: Crude prices rose on Friday and ended the week with gains, after Russia announced plans to lower oil output.

Details: The EU recently announced a ban on imports of seaborne Russian oil and oil products. The Group of Seven also announced price caps on the country’s oil and oil product.

Russia retaliated to the price caps by announcing plans to reduce oil output by 500,000 bpd (barrels per day) in March.

Goldman Sachs cut its 2023 Brent oil spot price estimate to $92 per barrel down, from $98 per barrel. It now sees Brent oil spot price for 2024 of $100 per barrel at $105 per barrel. Goldman Sachs also lowered its WTI spot price forecast for 2023 and 2024 from $92 per barrel to $86 per barrel and from $99 per barrel to $94 per barrel, respectively.

WTI crude for March delivery gained $1.66, or 2.1%, to close at $79.72 per barrel on the NYMEX on Friday. The instrument ended the week with gains or around 8.6%. April Brent crude added $1.89, or 2.2%, to settle at $86.39 per barrel on ICE Futures Europe on Friday, ending the week with gains of 8.1%.

In other energy trading, March gasoline rose 2.3% to $2.5037 a gallon, gaining 7.9% for the week, while March natural gas jumped 3.5% to $2.514 per million British thermal units, surging 4.3% last week.

What are expectations: Traders await inflation data from the US, due to be released on Tuesday. Analysts project the US annual inflation rate to decelerate to 6.3% in January, from 6.5% in December. The API’s report on crude oil stockpiles, scheduled for release on Tuesday, will also remain in focus.

Other Markets: US trading indices closed mixed on Friday, with the Dow Jones index and S&P 500 up by 0.50% and 0.22%, respectively, and the Nasdaq 100 down by 0.62%.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0662 and 1.0671 Positive
GBP/USD – 1.2043 and 1.2054 Negative
AUD/USD – 0.6904 and 0.6916 Negative
Copper  – 4.0102 and 4.0247 Negative
FTSE 100 – 7865.50 and 7882.12 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0665, -0.13%) Dow ($33,827, -0.20%) Brent ($85.66, -0.9%)
GBP/USD (1.2048, -0.10%) S&P500 ($4,085, -0.35%) WTI ($78.98, -0.9%)
USD/JPY (131.89, 0.38%) Nasdaq ($12,295, -0.41%) Gold ($1,872, -0.1%)

What else to watch today

Turkey’s retail sales, current account, Central Bank of Brazil’s focus market readout, India’s consumer price inflation, US consumer inflation expectations, Eurogroup meeting as well as South Africa’s SACCI business confidence index.

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