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BenzingaEditorial

PayPal’s eBay-Less Future Is In the Making

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On Monday, PayPal Holdings Inc (NASDAQ: PYPL) revealed its third quarter revenue increased YoY as well as that it is joining forces with no other than the e-commerce titan itself, Amazon Inc (NASDAQ: AMZN). However, although shares rose as much as 6.3% upon the report, they reversed course during the earnings call and plunged more than 5% as the fintech pioneer reduced its full year forecast due to a concerning macroeconomic environment.

Third quarter figures

During the quarter that ended on September 30th, total payment volume surged 26% to $310 billion with the addition of 13.3 million net new active accounts, making up 416 million accounts.

Adjusted earnings per share amounted to $1.11, exceeding $1.07 that Refinitiv survey of analysts estimated. Despite increasing 13% YoY, revenue amounted to $6.18 billion which was below the expected $6.23 billion.

Venmo

As of 2022, U.S. customers will be able to make their purchases both on Amazon.com and the Amazon mobile shopping app through Venmo that began supporting cryptocurrency services in April. Venmo’s payment volume alone jumped 36% to $60 billion.

This deal comes as PayPal prepares an eBay-less future. Six years after the parties decided to go their separate wats, eBay Inc (NASDAQ: EBAY) is now transitioning sellers to its own payment system with PayPal’s volume on its marketplace dropping 45% in the quarter. As a result, eBay now accounts for merely 4% of PayPal’s revenue.

Fourth quarter guidance

Adjusted earnings are expected at $1.12 per share, less than $1.27 that Refinitiv consensus expected. Net revenue is also expected significantly below the estimate of $7.24 billion, or more precisely somewhere between $6.85 billion and $6.95 billion.

Full year guidance

Economic growth in a challenging macro environment due to the end of stimulus payments and the spread of the Delta variant which has affected travel trends have resulted in lowered guidance, more precisely 18% revenue growth for the year. The growth estimate implies a revenue between $25.3 billion to $25.4 billion, while analysts expected $25.78 billion.

What about Pinterest?

Last month, reports surfaced that PayPal was in late-stage talks to acquire Pinterest Inc (NYSE: PINS). PayPal subsequently said it was not pursuing this acquisition “at this time” and president and CEO of PayPal, Dan Schulman addressed the matter on the earnings call without even mentioning the social curation website for sharing and categorizing images.

A new crypto chapter

The latest Amazon deal is the beginning of an exciting new chapter in which PayPal has been freed from the contractual obligations of the eBay operating agreement. But PayPal has already made its big crypto debut last year when it allowed its U.S. users to buy, sell, and check out with their digital assets. With its 33 million retailers, PayPal is well positioned to  challenge the leading market exchange Coinbase Global Inc (NASDAQ: COIN) whose shares also dropped after its Q3 revenue were short of analysts’ estimates on Tuesday.

The verdict

The market focused more on a lowered guidance than on the potential of the Venmo and Amazon partnership as shares plunged 12%, which is the stock’s biggest drop since COVID-19 started its relentless march across the globe in March last year.

Like many analysts who lowered their price targets after the call, JMP analysts feel that management is feeling a bit snake bitten, like many others, by the abrupt turnaround in demand due to the rise of the Delta variant andconsumer spending concerns. But the Amazon deal represents the bigger picture than the full year guidance as after all, great things take time.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

HP and Dell Rejoice as Offices Reopen

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As companies continue commiting funds to lure employees back into offices by improving their experience, PC demand keeps on going strong.

During Tuesday’s extended trading, HP Inc’s (NYSE: HPQ) shares jumped 8% after the computer hardware maker reported better-than-expected quarterly results and provided strong guidance for the undergoing quarter. Dell Technologies Inc (NASDAQ: DELL) also posted strong results, aided by commercial PCs and sales of high-end consumer devices, pulling its stock up 0.6% in after-hours trading.

HP’s quarter results

The PC and printer maker generated sales of $16.68 billion exceeding the expected $15.4 billion, according to Refinitiv. Sales increased 9.3% from the year-ago period. It made $3.1 billion in net income, including a one-time $1.78 billion legal settlement, also exceeding Wall Street estimates. It made $0.94 in adjusted earnings, exceeding the expected $0.88.

Per segment

Although consumer PC sales dropped 3% compared to last year’s lofty figure, commercial PC revenue expanded 25%. However, total PC unit sales were down 9%. Personal systems net revenue rose 13% YoY as it came in at $11.8 billion.

Printing business saw its revenue grow 1% YoY as it generated sales of $4.9 billion. Commercial printing revenue was up 19% YoY while consumer printing revenue fell 6%.

Trends

According to HP CEO Enrique Lores, in an environment shaped by supply constraints, the company is prioritizing its commercial clients due to better margins.

The (mixed) pandemic effect

HP’s PC business boomed and the sale of home printers also increased, but the shutdown of offices across the globe weighed on its ability to revitalize its important print-services business. Fortunately, this is no longer the case as offices have started reopening.

According to IDC, HP ranked second in world-wide PC shipments over the latest quarter. It is close behind Lenovo Group Ltd. (OTC: LNVGY) but it managed to beat Apple Inc (NASDAQ: AAPL) and Dell. However, its shipments were down almost 6% in reference to last year’s comparable figure year while nearly all of the other top companies’ shipments increased YoY. Mr. Lores did state that the strong results are owed in part by emphasizing shipments of more-lucrative models.

Guidance

HP expects strong demand for its personal computers to linger for the foreseeable future. For the undergoing quarter, it expects to earn  $0.92 to $0.98 per share and for the full fiscal year that is due to end on October 31st, 2022, it expects them to be in the range between $3.86 to $4.06, with both forecasts beating Wall Street expectations.

Dell

The PC maker reported its strongest-ever third quarter due to strong growth of commercial PC and high-end consumer devices. Dell generated sales of $26.4 billion that resulted in $3.9 billion in profit. It also topped expectations as it expects revenue of the undergoing quarter to increase at least 12% from the year-ago period and reach $27 billion to $28 billion. Chief Financial Officer Tom Sweet expects growth to continue next year.

Outlook

Despite chip supply shortages and port congestions causing delays, the holiday quarter seems promising. According to International Data Corp, the global PC market has grown for six consecutive quarters and these challenges have stopped sales from taking off even more. Therefore, HP and Dell seem to be covered as they are making the best of the situation in an environment defined by mess COVID-19 created across global supply chains.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

Ford Is Doing Whatever It Takes To Overthrown Tesla

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The legendary Blue Oval has its eyes set to become the biggest US-based EV manufacturer. To pull that off, Ford Motor (NYSE: F) needs to greatly ramp up its production so it doesn’t come as a surprise that the company is now expecting to produce 600,000 EVs per year globally by end of 2023, which is double compared to the original plan. According to Automotive News, this figure will be made by Mustang Mach-E, F-150 Lightning and E-Transit. Moreover, Jim Farley Tweeted this will happen before Blue Oval City and other EV sites come online.

Ford is now feeling much more confident

Ford is enjoying much stronger EV demand than expected. The Mustang Mach-E is being sold on three continents. Since it was unveiled, the Ford F-150 Lightning has been as popular as it gets by receiving 100,000 reservations within the first three weeks, after which they increased to 160,000. Due to the high demand for America’s bestselling vehicle, the F-150 pickup, Ford previously decided to invest $250 million to boost its production, creating 450 new jobs to help it make 80,000 trucks a year but it remains to be seen how will that change considering it doubled its manufacturing goal.

Bonus points for dropping joint vehicle with Rivian

A large, legacy manufacturer tying up with a new startup that has the right technology and specs to make an electric version of an American favorite — the SUV, sounded as a match made in heaven. Although the companies remain linked as Ford still holds a 12% stake in Rivian Automotive (NASDAQ: RIVN) with shares now worth billions of dollars,  the two companies canceled their plans to jointly develop an electric vehicle publicly on November 19th .

Rivian’s successful public debut

Since its IPO on November 10th,  Rivian’s market capitalization skyrocketed to mindblowing $110 billion, leaving Ford behind at $78.2 billion. The start-up became the third most valuable automaker behind Tesla Inc (NASDAQ: TSLA) and Toyota Motor (NYSE: TM), pushing Volkswagen (OTC: VWAGY) to fourth place with only two models in its portfolio- the R1T being produced and its R1S production postponed with earliest deliveries pushed back from January 2022 to March-April 2022 due to supply chain disruptions no carmaker is immune to. But, the interest for its vehicles is there.

Ford doesn’t need Rivian anymore

Several points indicate Farley may be right about Ford not needing Rivian any longer. Reservations for Ford’s electric pickup truck, the F-150 Lightning, surpassed 150,000 units in September as the model appears designed to benefit from immense and lasting popularity of US’ best selling pickup – the Ford F-150, emulating much of its utility. The Lightning is also more of a “workhorse truck” than the Rivian R1T that is being marketed mainly for recreation.

Ford also announced an $11.4 billion joint investment with a South Korean battery maker, SK Innovation, so it clearly has a bigger picture in mind. Rivian helped the legacy automaker gain courage and ground while it was making its first EV steps.

Ford potentially gained a major boost for its EV plans by separating from the EV start-up.

According to CNBC, Ford accumulated approximately 102 million shares in all, spending a total of $820 million in the process for its current 12% stake that is now worth approximately $13 billion. By selling these shares, which it now no longer needs since it is not partnering with Rivian on any future projects, Ford has cash at its disposal to boost and accelerate its EV plans.

There is the risk of Rivian’s shares dropping after the initial IPO euphoria, resulting in a greatly reduced cash windfall for Ford who would still make immense gains above the initial average $8.04 it paid. Whatever the case, Ford has the near-future option to enhance its liquidity with billions of additional dollars if it sells its Rivian shares. These gains would be taxed, but they wouldn’t be burdening the company’s balance sheet with debt.

However, Ford hasn’t given any indications of doing that and it will presumably have to wait for the lockup post-IPO period to expire.

Competitors aren’t standing still

Before it achieves its ultimate goal as the US-based leader, Ford first needs to become the second largest behind Tesla. It remains to be seen whether it can achieve that with 600,000-a-year production target. Meanwhile, its long-time Detroit rival General Motors (NYSE: GM) is expecting to sell 1 million electric vehicles by 2025 across the globe so it is also ramping up production. Then there are many other start-ups such as Atlis Motor Vehicles and Hercules Electric Vehicles whose electric pickups are scheduled to hit the roads next year, with both of their models being equipped with ground-breaking solar technology by Worksport Ltd’s (NASDAQ: WKSP) subsidiary TerraVis Energy.

Ford’s strategy

In Farley’s words, the legacy automakers’ approach was reflected when it built ventilators and personal protective equipment to contribute to the battle against COVID-19. Whatever it takes, Ford finds a way- and its strategy seems to be working.

With its aggressive investments such as its massive Blue Oval City EV, fast-moving construction of cutting-edge facilities such as battery factories, and strong progress on the Lightning, Ford seems to be on track with its electrifications plans. Along with the addition of a reserve of cash accessible by liquidating its Rivian shares, Ford now has more flexibility and greater resources to support the production of its EV lineup.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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BenzingaEditorial

The Mighty Alibaba Has Fallen

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Last Thursday, the all-mighty Chinese multinational technology company missed revenue and earnings expectations for the September quarter. Moreover, Alibaba Group Holdings Limited (NYSE: BABA) warned of weaker growth this year as China’s economy slows and Beijing continues its regulatory crackdown with the latest fine hitting the company over the weekend.

Fiscal second quarter figures

For the quarter ended in September, the company’s earnings per share declined 38% YoY as it earned 11.20 yuan per share, below the estimated 12.36 yuan. Its EBITDA fell 27% YoY to 34.84 billion, but this is largely due to investments into new businesses.

But overall revenue grew 29% YoY, as it amounted to 200.69 billion yuan which translates to $31.4 billion) but still below the estimated 204.93 billion yuan.

The revenue of its core commerce business expanded 31% YoY but also missed expectations as the segment generated 171.17 billion yuan. Cloud computing, one of its most important assets that the company is building its future upon, grew 33% YoY to 20 billion yuan with adjusted EBITA for the segment amounting to 396 million yuan. This is a great improvement from 567 million yuan loss it made in last year’s comparable quarter.

However, the largest portion of the company’s sales comes from customer management revenue (CMR) and that segment grew only 3% YoY due to slow growth of sales on its platform. As China’s economy slowed down, so did consumption. Besides the slowing market conditions, Alibaba is also facing an increasingly crowded e-commerce market in China.

An increasingly crowded market

JD.com Inc (NASDAQ: JD) hasn’t been the only one giving it a headache, as newer players such as Pinduoduo Inc (NASDAQ: PDD) and even TikTok-owner ByteDance are putting up a good fight.  Both Alibaba and JD.com achieved record sales on Singles Day record but this will be reflected in the undergoing quarter’s report. Both companies also touted their commitment to a more sustainable future during the event, but it seems that this wasn’t enough for Beijing.

Fines

Beijing is determined to teach the country’s largest tech firms to behave with a slew of new regulations. Alibaba, Tencent (OTC: TCEHY)  and Baidu (NASDAQ: BIDU) were among the corporations who were all slapped with fines over the weekend for violating antitrust laws. Alibaba was already fined $2.8 billion back in in April as part of an anti-monopoly probe.

Outlook

The company slashed its current fiscal year revenue guidance from expecting revenue to amount 930 billion yuan, which would have been about 29.5% YoY growth to now expecting only 20% and 23% YoY growth.

The CEO Daniel Zhang emphasized that Alibaba continues to firmly invest into its three strategic pillars to establish solid foundations for long-term sustainable growth. Alibaba is betting on domestic consumption, globalization, and cloud computing to create firm grounds for a more sustainable future, but regulatory action threatens to derail its growth prospects. Only time will tell if the e-commerce tech giant can rise from these unfavourable circumstances.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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