Profit companies

PayPal shares jump on Elliott’s $2 billion stake, boost full-year profit forecast

The PayPal app logo seen displayed on a mobile phone in this illustrative photo from October 16, 2017. REUTERS/Thomas White/Illustration

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Aug 2 (Reuters) – PayPal Holdings (PYPL.O) said on Tuesday that activist investor Elliott Management had a stake of more than $2 billion in the fintech company and that the company had raised its full-year profit forecast .

PayPal shares jumped nearly 12% after also announcing a series of moves, including the appointment of Blake Jorgensen as chief financial officer and a $15 billion buyout program.

The fintech company has “an unrivaled, industry-leading footprint in its payments business,” said Jesse Cohn, managing partner at Elliott, a day after the investment firm disclosed a similar stake in Pinterest Inc (PINS.N). Read more

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PayPal, which was among the companies gaining big during the pandemic, saw its shares wipe out more than 70% of their market value in a year as e-commerce growth retreated from pandemic-era records .

“Given the stock’s significant underperformance over the past nine months, this may be enough to satisfy investors, who have lost some confidence in management’s credibility after so many downgrades,” he said. said Jason Benowitz, senior portfolio manager at Roosevelt Investments.

PayPal also plans to cut staff to cut costs and said it estimates annual revenue to grow 11% on an FXN basis, its lower end from previous forecasts of around 11% and 13%.

“PayPal let an activist investor into the tent with an information-sharing agreement. We expect the company to significantly refresh its upper management layer and make tough choices to improve its profit margins,” said Benowitz.

The company also announced a series of moves, including the appointment of Blake Jorgensen as Paypal’s chief financial officer and a new $15 billion buyout program. Blake, who takes over on Wednesday, joins PayPal from Electronic Arts (EA.O).

The company reported lower adjusted earnings of 93 cents per share for the three months ended June 30, which comfortably beat estimates of 86 cents per share.

It raised its adjusted earnings forecast to between $3.87 and $3.97 per share for the year, up from its previous guidance of $3.81 and $3.93.

(Story corrects spelling of Elliott in title and paragraph 3. Also corrects Roosevelt investment company name of Roose in paragraph 5)

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Reporting by Mehnaz Yasmin in Bangalore; Editing by Krishna Chandra Eluri

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