PayPal stocks soar following Elliott’s $2B stake

Shares of PayPal Holdings Inc. shot up on Wednesday’s trading session, bolstered by the firm’s information-sharing agreement on value creation with Elliott Management. The financial technology company increased 10.35% or 9.28 points to $98.91 per share. The stocks extended their strength after a 1.20% jump on Tuesday.

The activist investor, with a $2.00 billion investment, cited that the California-based business has an industry-leading footprint across the sector. This statement came a day after the fund manager disclosed a similar stake in Pinterest.

Accordingly, PayPal was among the firms that grabbed significant profits during the pandemic. However, its shares eventually lost about 70.00% of their market value in a year as e-commerce growth retreated.

In line with this, Elliott’s move ensured investors, considering the stock’s meaningful underperformance. They expect the fintech company to materially refresh its top management layer and make tough choices to improve profit margins.

PayPal also announced a slew of moves, including appointing Blake Jorgensen as the new chief financial officer. At the same time, it unveiled a new $15.00 billion repurchase program.

Moreover, the company expects to reduce its headcount, aiming to reduce costs amid an inflationary environment.

Correspondingly, PayPal estimates annual revenue to rise 11.00% on a neutral foreign exchange basis. This outlook pinned the lower end of its previous guidance of 11.00% and 13.00%.

PayPal’s Q2 results beat expectations

In addition, another upside for PayPal’s stocks is the better-than-expected second-quarter results of the company.

Subsequently, the revenue grew 9.00% year-over-year to $6.81 billion, beating the market consensus of $6.79 billion. Then, earnings posted at $0.93 per share, higher than the expected $0.86 apiece.

At the end of the quarter, PayPal operated with 429.00 million active accounts, representing an annual increase of 6.00%. However, this figure came in below the 432.80 million projection.

Nevertheless, the fintech company highlighted its progress in capital efficiency. As a result, it anticipated reducing costs by $900.00 million this year.