PayPal or Mastercard: Which Payments Stock Has Better Upside Potential?
PayPal or Mastercard: Which Payments Stock Has Better Upside Potential?
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The COVID-19 pandemic has exacerbated e-commerce growth and with it the need for the adoption of digital payment methods. The global digital payment market could grow to $154.1 billion by 2025, reflecting a CAGR (or compound annual growth rate) of 14.2% from 2020, according to market estimates.
Payment platforms like PayPal and Square are benefiting from rapid demand for contactless payments since the pandemic while Visa and Mastercard are grappling with a decline in travel and entertainment spending. We will use the TipRanks Stock Comparison tool to place PayPal and Mastercard alongside each other to see which stock offers a more compelling investment opportunity.
PayPal Holdings (PYPL)
Paypal has emerged as a leading player in the digital payments space. The company, which was spun off from eBay in 2015, now boasts 361 million active accounts with 15.2 million net new active accounts added in 3Q.
Earlier this month, PayPal reported upbeat 3Q results but investors were disappointed with the company’s 4Q guidance. The company’s 3Q revenue rose about 25% Y/Y to $5.46 billion and TPV (Total Payment Volume), which indicates payments processed through the PayPal platform, grew 38% to $247 billion. The top-line gained from robust growth in e-commerce and digital payments, while travel volumes continued to be weak.
Meanwhile, 3Q adjusted EPS increased 41% Y/Y to $1.07 with adjusted operating margin expanding 377 basis points to 27.2%. (See PYPL stock analysis on TipRanks)
Looking ahead, the company believes that it is on track to end the year with 70 million net new active accounts. It expects revenue growth (on a spot rate basis) of 20%-25% in 4Q and 20%-21% for the full-year. Paypal anticipates adjusted EPS growth in the range of 17%-18% in 4Q and 27%-28% for the full-year.
PayPal sees strong growth prospects in its Venmo mobile payment platform. Venmo had 65 million users in 3Q and its TPV increased 61% to $44 billion during the quarter. The company expects Venmo revenue to generate $900 million in 2021 driven by investments in new capabilities. It aims to complete the roll out of Venmo credit card in the first quarter of 2021.
To further boost its revenue and promote touchless payments, PayPal launched QR Code technology in 28 markets globally in May. Ten major retailers, including CVS, Nike and Bed, Bath & Beyond, have signed up for the company’s QR Code solution and PayPal is in discussions with over 100 large retailers regarding this tool.
In addition, PayPal is now entering the crypto market and recently announced a new service that will allow its account holders to buy, sell and hold cryptocurrencies. The company is initially offering this service in the U.S. and intends to expand it to select international markets in the first half of 2021.
On Nov. 10, Mizuho Securities analyst Dan Dolev lowered his price target on the stock to $270 from $290, but reiterated a Buy rating. The analyst noted that the 9% selloff in Paypal shares on Nov. 9 was caused by a favorable update by Pfizer on its COVID-19 vaccine and concerns about mean reversion in e-commerce consumption patterns.
However, Dolev feels that such concerns are “overblown” and stated that “Our PayPal & Venmo QR checkout survey, coupled with upbeat early adoption data, suggest QR POS checkout can boost 2021 TPV growth by 3%+, followed by a 10-15% medium-term opportunity.” The analyst remains bullish about PayPal but lowered his price target due to “eBay’s transition to managed payments, which drives pressure on the take rate and is well flagged; we believe it is 100% transitory and won’t affect PYPL’s long-term strong fundamentals.”
Overall, the Street shares Dolev's bullish outlook. The Strong Buy analyst consensus is based on 26 Buys versus 4 Holds. The average price target stands at $225.50, reflecting an upside potential of 17.2% in the coming year. Shares have advanced 78% so far this year.
Mastercard (MA)
Mastercard along with its closest rival Visa dominates the global credit and debit cards market. It has a presence in over 210 countries through its 2.7 billion Mastercard and Maestro-branded cards. However, the COVID-induced crisis in travel spending and cross-border transactions have dragged the company’s business down in recent months.
The company’s 3Q revenue and earnings lagged analysts’ expectations and declined from the year-ago quarter. Notably, revenue fell 14% Y/Y to $3.84 billion as cross-border volume fees plunged 48% (declined 36% on a local currency basis). Mastercard experienced some improvement in domestic travel spending in the quarter, including on categories such as lodging and restaurants. But, cross-border travel remained constrained.
In a bright spot, switched transactions (indicate the number of transactions initiated, authorized, cleared and settled through Mastercard network), grew 5% in 3Q boosted by an increase in cashless payments. Overall, adjusted EPS fell 26% Y/Y to $1.60 in 3Q as lower revenue weighed on the bottom line. Looking ahead, the company is seeing signs of improvement but feels that recovery will take time and will be positively impacted by the availability of effective COVID-19 therapeutics and vaccines.
In reaction to the 3Q earnings release, RBC Capital analyst Daniel Perlin lowered the stock's price target to $350 from $372 but reiterated a Buy rating. The analyst noted that the 3Q earnings underperformance reflects how the global travel recovery can "weigh heavily" on Mastercard’s business model. Perlin lowered his FY20 EPS forecast by $0.29 to $6.30 and his FY21 EPS estimate by $0.48 to $8.05, but continues to have a positive outlook on the stock over the longer-term. He believes that investors should focus on "secular-driven stories that provide solid organic growth".
Meanwhile, Mastercard is taking several initiatives to capitalize the accelerated shift towards electronic payments. The company has launched Shop Anywhere and AI Powered Drive Through solutions that will help its retail, entertainment and hospitality partners execute touch-free transactions. (See MA stock analysis on TipRanks)
The company recently extended its partnership with PayPal to offer Mastercard Send Instant Transfer service to nine European markets following a successful launch in the U.S. and Singapore. This service allows PayPal customers to cash out funds from their PayPal wallets to their Mastercard cards in real-time.
The company has also collaborated with Samsung and SoFi to launch Samsung Money by SoFi, a mobile-first money management platform. Furthermore, it has accelerated its Crypto Card Partner Program and has awarded Wirex a principal membership license thus making it the first native cryptocurrency platform to issue Mastercard payment cards.
The rest of the Street has a bullish stance, assigning a Strong Buy analyst consensus based on 19 Buys and 3 Holds. With shares up 11.3% year-to-date, the average price target of $361.28 indicates upside potential of 8.7% in the months ahead.
Conclusion
Both PayPal and Mastercard are well-positioned to benefit from the growth in digital payments. Looking at the recent financial results, PayPal has fared better than Mastercard. What's more, PayPal stock has outperformed Mastercard so far this year and offers bigger upside potential, which for now makes it the more attractive pick.
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment
The post PayPal or Mastercard: Which Payments Stock Has Better Upside Potential? appeared first on TipRanks Financial Blog.
Uncategorized
Homes listed for sale in early June sell for $7,700 more
New Zillow research suggests the spring home shopping season may see a second wave this summer if mortgage rates fall
The post Homes listed for sale in…
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- A Zillow analysis of 2023 home sales finds homes listed in the first two weeks of June sold for 2.3% more.
- The best time to list a home for sale is a month later than it was in 2019, likely driven by mortgage rates.
- The best time to list can be as early as the second half of February in San Francisco, and as late as the first half of July in New York and Philadelphia.
Spring home sellers looking to maximize their sale price may want to wait it out and list their home for sale in the first half of June. A new Zillow® analysis of 2023 sales found that homes listed in the first two weeks of June sold for 2.3% more, a $7,700 boost on a typical U.S. home.
The best time to list consistently had been early May in the years leading up to the pandemic. The shift to June suggests mortgage rates are strongly influencing demand on top of the usual seasonality that brings buyers to the market in the spring. This home-shopping season is poised to follow a similar pattern as that in 2023, with the potential for a second wave if the Federal Reserve lowers interest rates midyear or later.
The 2.3% sale price premium registered last June followed the first spring in more than 15 years with mortgage rates over 6% on a 30-year fixed-rate loan. The high rates put home buyers on the back foot, and as rates continued upward through May, they were still reassessing and less likely to bid boldly. In June, however, rates pulled back a little from 6.79% to 6.67%, which likely presented an opportunity for determined buyers heading into summer. More buyers understood their market position and could afford to transact, boosting competition and sale prices.
The old logic was that sellers could earn a premium by listing in late spring, when search activity hit its peak. Now, with persistently low inventory, mortgage rate fluctuations make their own seasonality. First-time home buyers who are on the edge of qualifying for a home loan may dip in and out of the market, depending on what’s happening with rates. It is almost certain the Federal Reserve will push back any interest-rate cuts to mid-2024 at the earliest. If mortgage rates follow, that could bring another surge of buyers later this year.
Mortgage rates have been impacting affordability and sale prices since they began rising rapidly two years ago. In 2022, sellers nationwide saw the highest sale premium when they listed their home in late March, right before rates barreled past 5% and continued climbing.
Zillow’s research finds the best time to list can vary widely by metropolitan area. In 2023, it was as early as the second half of February in San Francisco, and as late as the first half of July in New York. Thirty of the top 35 largest metro areas saw for-sale listings command the highest sale prices between May and early July last year.
Zillow also found a wide range in the sale price premiums associated with homes listed during those peak periods. At the hottest time of the year in San Jose, homes sold for 5.5% more, a $88,000 boost on a typical home. Meanwhile, homes in San Antonio sold for 1.9% more during that same time period.
| Metropolitan Area | Best Time to List | Price Premium | Dollar Boost |
| United States | First half of June | 2.3% | $7,700 |
| New York, NY | First half of July | 2.4% | $15,500 |
| Los Angeles, CA | First half of May | 4.1% | $39,300 |
| Chicago, IL | First half of June | 2.8% | $8,800 |
| Dallas, TX | First half of June | 2.5% | $9,200 |
| Houston, TX | Second half of April | 2.0% | $6,200 |
| Washington, DC | Second half of June | 2.2% | $12,700 |
| Philadelphia, PA | First half of July | 2.4% | $8,200 |
| Miami, FL | First half of June | 2.3% | $12,900 |
| Atlanta, GA | Second half of June | 2.3% | $8,700 |
| Boston, MA | Second half of May | 3.5% | $23,600 |
| Phoenix, AZ | First half of June | 3.2% | $14,700 |
| San Francisco, CA | Second half of February | 4.2% | $50,300 |
| Riverside, CA | First half of May | 2.7% | $15,600 |
| Detroit, MI | First half of July | 3.3% | $7,900 |
| Seattle, WA | First half of June | 4.3% | $31,500 |
| Minneapolis, MN | Second half of May | 3.7% | $13,400 |
| San Diego, CA | Second half of April | 3.1% | $29,600 |
| Tampa, FL | Second half of June | 2.1% | $8,000 |
| Denver, CO | Second half of May | 2.9% | $16,900 |
| Baltimore, MD | First half of July | 2.2% | $8,200 |
| St. Louis, MO | First half of June | 2.9% | $7,000 |
| Orlando, FL | First half of June | 2.2% | $8,700 |
| Charlotte, NC | Second half of May | 3.0% | $11,000 |
| San Antonio, TX | First half of June | 1.9% | $5,400 |
| Portland, OR | Second half of April | 2.6% | $14,300 |
| Sacramento, CA | First half of June | 3.2% | $17,900 |
| Pittsburgh, PA | Second half of June | 2.3% | $4,700 |
| Cincinnati, OH | Second half of April | 2.7% | $7,500 |
| Austin, TX | Second half of May | 2.8% | $12,600 |
| Las Vegas, NV | First half of June | 3.4% | $14,600 |
| Kansas City, MO | Second half of May | 2.5% | $7,300 |
| Columbus, OH | Second half of June | 3.3% | $10,400 |
| Indianapolis, IN | First half of July | 3.0% | $8,100 |
| Cleveland, OH | First half of July | 3.4% | $7,400 |
| San Jose, CA | First half of June | 5.5% | $88,400 |
The post Homes listed for sale in early June sell for $7,700 more appeared first on Zillow Research.
federal reserve pandemic home sales mortgage rates interest ratesGovernment
Survey Shows Declining Concerns Among Americans About COVID-19
Survey Shows Declining Concerns Among Americans About COVID-19
A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…
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A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.
What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will catch the disease and require hospitalization.
"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.
According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.
What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.
"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.
More via the Epoch Times;
The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.
Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.
“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.
COVID-19 No Longer an Emergency
The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.
The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.
“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.
The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.
“Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.
The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.
According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.
Government
Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”
Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"
Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…
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Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86.
So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip.
Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...
Thousands of people have been asking if I'd run for Senate leadership...
— Rand Paul (@RandPaul) March 8, 2024
...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each.
????????️VOTE NOW ????️ ???? Who would you like to be the next Senate leader?
— Rand Paul (@RandPaul) March 8, 2024
Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse.
I would support Rand Paul and suspect that other candidates will not actually run polls out of concern for the results, but let’s see if they will!
— Elon Musk (@elonmusk) March 8, 2024
Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:
This bill is an insult to the American people. The earmarks are all the wasteful spending that you could ever hope to see, and it should be defeated. Read more: https://t.co/Jt8K5iucA4 pic.twitter.com/I5okd4QgDg
— Senator Rand Paul (@SenRandPaul) March 8, 2024
In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”
Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act.
Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."
Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support:
Mitch McConnell, who has served in the Senate for almost 40 years, announced he'll step down this November.
— Robert F. Kennedy Jr (@RobertKennedyJr) February 28, 2024
Part of public service is about knowing when to usher in a new generation. It’s time to promote leaders in Washington, DC who won’t kowtow to the military contractors or…
In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience.
That may be his strongest endorsement yet.
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