eBay stock (NASDAQ: EBAY)
Jim Cramer stated Thursday that investors are receiving an excellent chance to purchase shares of a major fintech company on a down day.
PayPal, with a stock market value of more than $336 billion, is the company.
“This stock is a buy, and you just have to ignore what they said about eBay and recognize that growth is accelerating. It’s amazing. And, by the way, they’re ready to do whatever you want [with] crypto,” said the “Mad Money” host, whose charitable trust owns PayPal shares.
Shares of the digital payments company fell 6.23 percent to close at $283.17 on Thursday, one day after the company reported weak second-quarter revenue and issued a third-quarter earnings and revenue outlook that fell short of expectations.
PayPal reported second-quarter revenue of $6.24 billion late Wednesday. It did, however, outperform expectations with an adjusted per-share profit of $1.15. The company expects adjusted earnings per share of $1.07 on revenue of $6.15 billion to $6.25 billion in the current third quarter.
Despite Thursday’s decline, the stock, which reached an all-time high of $310.16 on Monday, was still up nearly 21% in 2021 and more than double that in the previous year.
During PayPal’s earnings call, much emphasis was placed on the challenges associated with eBay, which is transitioning away from PayPal and toward a new payment processing system. PayPal was once owned by eBay before it was spun off into a separate company in 2015. At the time, the two companies agreed that PayPal would continue to be eBay’s payment processor for the next five years. Last summer, the agreement came to an end.
According to a FactSet transcript, PayPal Chief Financial Officer John Rainey stated on the call that the eBay transition had a greater impact in the second quarter than in the first. He added that it will continue into the third quarter, which is one of the reasons for the weaker-than-expected guidance. While PayPal no longer accepts eBay payments, users can still use it to make purchases on the marketplace.
Cramer stated that he wanted to “look away” from the eBay situation and instead concentrate on areas where PayPal’s business is expanding.
Opportunities for cryptocurrency growth
“There has been incredible growth here. “Venmo is incredible,” Cramer said of PayPal’s peer-to-peer payments app, which competes with Square’s Cash App. Venmo processed approximately $58 billion in the third quarter, an increase of 58%, and users can buy and sell cryptocurrencies on the platform.
“The number of merchants added is truly astounding,” Cramer said. PayPal’s merchant services volume increased by 48 percent on a spot basis in the second quarter.
“With the exception of what they had to say about eBay,” Cramer said, “I thought it was a fantastic conference call.” He also mentioned that PayPal’s active accounts have surpassed 400 million.
One thing investors should be aware of, according to Cramer, is that PayPal CEO Dan Schulman “does not talk up his own stock.” He’s never done so. He tells you everything that can go wrong before you buy it. You should purchase it.”
ARK Invest’s Cathie Wood promotes Robinhood
Wood frequently states that the constituents in her flagship fund, ARK Innovation, are her strongest conviction names, which is a significant vote of confidence in HOOD.
Wood has amassed a sizable fan base since ARK Innovation returned nearly 150 percent last year. The fiery investor gets a lot of her attention from a younger demographic that she says values the role of innovation in today’s world.
“Millennials and Generation Z…they love learning,” Wood said after the GameStop trading frenzy. “They’re really excited about the new technologies that are emerging today, and they’re right on the cutting edge of them.”
The influence of these new traders is being scrutinized in the midst of an influx of retail investors into the stock market during the pandemic and trading manias like the one that occurred in GameStop in January.
“A lot of regulators and people in the investment business are concerned that allowing this kind of behavior will harm the little guy here,” Wood said. “Don’t underestimate this group of people; they’re actually more progressive than institutional investors, in my opinion. They may speculate on Robinhood, but the beauty of what is happening is that they will learn quickly because losses impact psychology and sentiment much more than gains.”
Pinterest downgraded to neutral by JPMorgan
The social media company beat top and bottom-line expectations in its second quarter, but its 454 million monthly active users were down from the previous period and far below analyst expectations. In premarket trading, the stock dropped 21%.
In a note to clients Friday, JPMorgan analyst Doug Anmuth downgraded the stock to neutral from overweight, saying that the user growth concerns would be too much for the stock to overcome in the short term.
“PINS delivered solid revenue growth amid high expectations for 2Q,” the note said, “but the magnitude of the MAU miss, disappointing 3Q outlook, and uncertainty around the shift to more of a creator platform are likely to keep pressure on shares [near-term].”
Furthermore, Anmuth believes that Pinterest’s push toward its Idea Pins video program may result in short-term difficulties.
JPMorgan cut its price target for Pinterest from $95 to $68 per share as part of the downgrade. The new target is more than 5% lower than the stock’s closing price on Thursday.
Anmuth was not the only analyst who took a break from Pinterest following the release of the report. Mark Mahaney of Evercore ISI downgraded Pinterest to in-line from outperform and reduced his price target to $60 per share from $98.