After expanding its partnership with Mastercard (MA) and exploring the deal-seeking habits of online shoppers through its newly acquired subsidiary Honey, PayPal (PYPL) is looking for a sweet breakout to a new all-time high.
In September, PayPal and Mastercard announced the continued global expansion of the PayPal Business Debit Mastercard to more European businesses. The debit card provides small businesses with instant access to their PayPal funds, with unlimited 0.5% cash back on all their eligible spending.
The PayPal Business Debit Mastercard first launched in the U.S. in 2003. With Mastercard, PayPal already offers the business debit card in Germany and the United Kingdom, and is expanding into Austria, France, Ireland, Italy and Spain.
The peer-to-peer payment pioneer joins fellow tech stocks Amazon.com (AMZN), Facebook (FB) and Microsoft (MSFT) on IBD’s latest list of new buys by the best mutual funds. Mastercard stock also made the list.
PayPal is currently a half position on IBD Leaderboard.
PayPal Attracts Sweet Deals With Honey In Covid-19 Pandemic
In January, PayPal announced it had completed its acquisition of Honey Science. At approximately $4 billion, the deal marked PayPal’s largest-ever purchase.
Honey is a free browser extension consumers can use to find discounts. In 2019, PayPal says Honey helped 17 million people around the world find over $1 billion in savings from a wide range of retailers. Honey’s service automatically searches the internet for coupons to apply at checkout.
Now wholly owned by PayPal, Honey recently released new research exploring the emotions and deal-seeking habits of online shoppers during the Covid-19 pandemic. It found that 58% of Americans have experienced a decrease in household income, prompting four out of five (79%) of Americans to say discovering deals and discounts is even more important than it was before the pandemic.
Stable Earnings Boost PayPal, Mastercard
Through the PayPal platform, the San Jose, Calif.-based company empowers more than 300 million consumers and merchants in over 200 markets. In response to the pandemic, PayPal launched QR Code Payments for a touch-free way to buy and sell in-person.
Having stable earnings is one key factor in making the IBD Long-Term Leaders list. On that score, both PayPal and Mastercard have solid track records. Unlike the Composite Rating where the higher the number the better, the lower the earnings stability number, the more stable the earnings. PayPal earns a 2 for earnings stability and the highest-possible 99 for its Composite Rating. Mastercard earns a 6 and 91, respectively.
After reporting flat earnings in Q1, PayPal rebounded to a 51% increase in Q2. The company is scheduled to report Q3 earnings Nov. 2. Analysts expect a 24% increase for the quarter and a 26% gain for the year.
PayPal Stock Nears Breakout, All-Time High
After a strong rebound from the coronavirus crash, PayPal stock is working on a cup-shaped base with a 212.55 buy point. A breakout would mark an all-time high.
In signs of technical strength and resilience, the shorter-term 21-day moving average is starting to climb above the longer-term 50-day line. PayPal is trading solidly above both moving averages. Showing stock market leadership, PayPal’s relative strength line is trending higher toward a new 52-week high.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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