When it comes to the online payment business, there’s one household brand that has become the go-to service provider over the years. That brand is PayPal (NASDAQ:PYPL), and the brand recognition is definitely paying off. In fact, last week’s earnings beat sent the stock climbing yet again. However, another thing that happened last week was an announcement by Facebook (NASDAQ:FB) that could change the game in online payment processing. Today, we’ll talk about what we saw from PayPal’s earnings, the announcement Facebook made, and what traders should be watching for ahead.
PayPal gains on strong earnings
As mentioned above, PayPal had an incredibly strong end of the week last week, and for good reason. The company reported its earnings on Thursday, blowing away expectations with regard to both revenue and EPS.
Here’s what we saw from the report…
- Revenue – In terms of revenue, PayPal definitely did not disappoint. In fact, during the quarter, analysts expected that the company would generate revenue in the amount of $2.94 billion. However, the company actually reported earnings in the amount of $2.98 billion.
- Earnings Per Share – On the earnings per share side, things were no different , as the company produced ahead of expectations once again. During the quarter, analysts expected that the company would generate earnings in the amount of $0.41 per share. However, the company actually reported earnings in the amount of $0.44 per share.
As you can see from above, the earnings report proved to be overwhelmingly positive. Not only did the company beat on earnings, but it also produced strong revenue, leading to bullish movement in the market.
Facebook is stepping on PayPal’s toes
At this stage in the game, many may think that PayPal has very little to worry about in terms of competition. After all, the company has claimed the top spot and there’s no competition in sight that could catch up to them. Well, that is, until an announcement was made by Facebook last week. Last week, Facebook announced that it has partnered with TransferWise to enable international money transfers through their the Facebook Messenger app. This service is directly in competition with Venmo, which is PayPal’s peer to peer payment service.
While new competition in an industry that’s already dominated is rarely a concern, this is different. At the end of the day, we’re not talking about a new company, we’re talking about the household brand that is Facebook. If Facebook can make this part of their service as successful as just about anything else they’ve done, well, that’s going to prove to be a big hit to PayPal.
What traders should be watching for ahead
Moving forward, PayPal is likely to generate several opportunities for binary options traders. However, if you’d like to take advantage of these opportunities, you’re going to have to keep a close eye on the news. In particular, pay close attention to Facebook’s progression in the peer-to-peer payment services sector. Further news surrounding the company’s work in this sector could lead to declines. Also, keep a close eye on growth within PayPal. While Facebook may be a threat, PayPal is still the top dog in this sector, and any changes they make to remain the most competitive will likely lead to movement in the stock.