PayPal 1Q21 Earnings: Publicis Sapient EVP Reaction

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With Paypal Holdings Inc (NASDAQ:PYPL) having just released their Q1 earnings report I wanted to offer up fresh comments from Publicis Sapient, Executive Vice President, Financial Services, David Donovan.

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Q1 2021 hedge fund letters, conferences and more

Paypal's Strongest Q1 Growth

Paypal, reporting their strongest Q1 growth in their history, has shown incredibly robust profitability and many avenues to pursue future growth. PayPal offers some of the most competitive products/services to both customers and merchants and it strikes the perfect balance between a large “reliable” investment and an exciting company with growth potential. 

In the past, PayPal has delivered very consistent revenue and earnings growth, and given these strong Q1 results, I expect this to be the case in the foreseeable future. But is there something that could derail the company’s trajectory? Venmo, for example, has lost ground to Square Cash App, and the latter could come to dominate the market. However, I am encouraged by Venmo’s lower fees and the recent addition of cryptocurrency trading. I see paypal as being able to capture some of that crypto trading.  On the other hand, we have Braintree, which has to compete with Stripe and this could prove even harder once Stripe goes public.

Presence In The International Markets

Lastly, I believe PayPal has to do something to maintain its presence in the international markets and when it comes to international transactions. PayPal’s offerings in this regard are expensive and the company is under attack from many fintech start-ups such as Revolut and the myriad other digital banks which we see popping up every day. Paypal is not cheap at 45 times earnings but as it continues to expand and grow revenue along with higher margins, I see the valuation becoming more attractive. Venmo has turned into a moat like business with its adopted userbase.

In conclusion, I find PayPal to be a very compelling investment given its position in the market, financial strength, profitability, growth prospects and track record of successful acquisitions. This company is and will remain a staple of the rapidly growing fintech sector, making this a stock you want to own for the long term.

About Publicis Sapient

Publicis Sapient, the Digital Business Transformation hub of Publicis Groupe, is purpose-built to help clients reimagine their business for the digital age, helping ensure what they do has a material impact on their business performance and the experience of their customers. We bring a startup mindset, fully integrated teams, and agile methods to established companies to unlock value in ways that delight their customers and improve their operational effectiveness. Our approach to transformation is grounded in a view of both the company and the customers simultaneously, and a unique fusing of strategy and consulting, experience, and engineering with an enduring culture of problem-solving creativity. We are proud to say that this culture is embedded among every one of our 20,000 employees and leaders alike, who believe that our role is to help our clients navigate the space between now and next. I.e. the HOW of Digital Business Transformation.

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