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Pandemic Shift To Consumers Online Spending Propels PayPal Profit To Beat Estimates

Pandemic Shift To Consumers Online Spending Propels PayPal Profit To Beat Estimates
The novel coronavirus or the Covid-19 pandemic has resulted in a major shift of consumers towards online shopping and digital transactions which has turned out to be very beneficial for the digital payments firm PayPal Holdings Inc.
The company comfortably beat estimates quarterly profit of analysts at the Wall Street as the pandemic induced consumer payment choice shift resulted in record levels of payment volumes for the company for both the latest completed quarter as well as for the entire year.
Announcing the record beating results, PayPal said that the company was anticipating that there would be an addition of about 50 million active users for the current year. the company also forecast projected revenues of about $25.5 billion which was well over the analysts’ estimates of revenues of $21.4 billion.
The strong performance during the latest completed quarter propelled the stocks of the company by 5 per cent.
“At the beginning of the pandemic, consumers amid lockdown had no choice but to do all of their shopping online,” said the company’s Chief Executive Officer Dan Schulman. “Today, the vast majority of consumers state that post pandemic, they will continue to shop online at their current elevated levels because it is more convenient, easier and saves time,” Schulman added.
Since the beginning of the Covid-19 pandemic, there has been an increase in people choosing to use online and digital payments methods for financial transactions because consumers were stuck at home due to restrictions imposed by authorities to prevent the spread of the pandemic and therefore was forced to depend on mobile apps for shopping and paying bills.
2020 marked the company’s strongest ever annual performance with the company processing $936 billion worth of payments which was a record in itself, said the San Jose, California-based PayPal.
The National Retail Federation said last month that there was also a growth of 8.3 per cent in holiday sales in the United States which was the highest for the country in the last in at least 19 years.  
There was a rise of 39 per cent in the processed payments volume of PayPal in the latest completed quarter at $277.1 billion as the company also managed to attract an additional 16 million net new active customers, the company said announcing the results.
During the latest completed quarter, 60 per cent more payments were processed by Venmo, PayPal’s service that allows individuals in the United States to send each other money through an app.
The company also reported a 23 per cent rise in its quarterly revenue at $6.12 billion which also comfortably beat estimates of analysts.
In the fourth quarter ended December 31, an adjusted earnings of $1.08 per share was also reported by the company which was higher than the average estimate of $1 per share of analysts who were polled by Refinitiv IBES.
Exceptional response for its new cryptocurrency offering was also witnessed by PayPal, Schulman said.

Christopher J. Mitchell

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