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Online Payment Processing Clearly ‘Pays’: Paypal Holdings Inc Stock (NASDAQ: PYPL)

Online Payment Processing Clearly ‘Pays’: Paypal Holdings Inc Stock (NASDAQ: PYPL)

Paypal Holdings Inc (NASDAQ: PYPL) is trading higher after-hours yesterday as the company reported earnings after the market close. The company not only surpassed Q2 earnings and revenue estimates, it likely reported its best quarter ever. With so many shoppers directing their purchases online, the opportunity is significant for PYPL right now, with few of the people issues that come along with COVID. The stock broke out of a symmetrical triangle during trading yesterday and looks poised for another run today.

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  • Analysts were expecting $0.84 in Q2 EPS coming into the report. That level of earnings had been aggressively revised over the past 60 days and yet the company blew it away with $1.07 per share. The trend of surpassing estimates is nothing new, but there appears to be a little greater momentum on Wednesday’s beat. In response to the trend toward online shopping following COVID, the CEO Dan Schulman said, “The world has moved to a digital-first economy and I don’t think there is any going back.”

    That’s a pretty strong statement coming from someone that is at the epicenter of online payments and processing.

    Investors certainly appeared to be gearing up for a significant earnings beat with PYPL closing 4.73% higher yesterday. The movement carried the stock above resistance and completed a symmetrical triangle formation. The formation is a neutral pattern that become bullish with a breakout above the upper downward-sloping trendline. Accompanying the move was substantial volume and a close near the high of the day. The $20 width of the pattern is added to the $180 breakout level for a $200 target.

    If the price opens tomorrow near $193, the 18 SEP 20 190/195 vertical could likely be bought for around $2.50. The idea is to buy one leg ITM and sell the next OTM option.

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