PayPal beats on earnings and revenue, but falls after hours on profit taking

PayPal Holdings (PYPL) reported fourth quarter earnings of 55 cents a share, 3 cents a share above Wall Street estimates, and revenue of $3.71 billion (on a foreign-exchange neutral basis) vs projections for $3.63 billion. Revenue climbed 24% year over year for the quarter.

After climbing during the regular session, shares of PayPal fell 4.14% in after-hours trading as investors took profits. Not surprising since PayPal shares were up 114.48% in the last 12 months as of the close on January 31.

The company showed the growth in total payment volume (32%) and active customers (a gain of 8.7 million in the quarter and 90% year over year) that led me to make the stock a member of my long-term 50 Stocks Portfolio after the company’s split from eBay (EBAY) in 2017. (The position in this portfolio is up 107.77% since February 15, 2017.)

In addition–and its an important addition since one reason to own PayPal is for exposure to growth in the digital payments sector–PayPal’s Venmo unit processed $9.4 billion in payment volume in the quarter, up 93% year over year.  More than two million U.S. merchants now offer Venmo as a mobile payment option. The company reported that it continues its global roll out of One Touch, it’s checkout interface, and ended the quarter with 80 million customers choosing to opt in, up from 40 million a year ago. At the end of 2017, 8 million merchants offered One Touch, up from 5 million a year ago.

For the full 2018 year PayPal told Wall Street to expect revenue growth of 15% to 17%.