PayPal Climbs After Analyst Day

PayPal Holdings Inc. (PYPL) investors have lots to be excited about.

On Thursday, at its bi-annual investor day in San Francisco, the online payment systems company upgraded its guidance, hinted at share buybacks and revealed several new growth strategies designed to help it compete with key rivals Amazon.com Inc. (AMZN) and Square Inc. (SQ).

Bullish Outlook

PayPal kicked off its annual investor day with a bang by raising its three-to-five-year outlook. The company now expects to grow adjusted earnings by 20% and deliver revenue growth of about 18%.

According to TheStreet.com, PayPal executives plan to spend $1 billion to $3 billion on merger and acquisitions (M&A) to bolster the company's merchant and financial services products now that its 15-year partnership with eBay Inc. (EBAY) is winding down — eBay announced earlier this year that Dutch fintech company Adyen will become its primary payments processor.

Encouragingly, CFO John Rainer added that the company should have $15 billion in cash by the end of its 2018 fiscal year and is keen to return as much as half of its free cash flow to shareholders. 

New Ventures

Aside from ramping up M&A activity, PayPal discussed other ways it plans to grow its business, including an expanded partnership with Alphabet Inc.’s (GOOGL) Google. Under the terms of the deal, PayPal will now be made available to use across Google apps and services as a new standard payment option.

The company also announced several other exciting new initiatives. To become more like a traditional bank, PayPal is currently testing a Venmo debit card. Meanwhile, CEO Dan Schulman announced plans to team up with financial institutions Citigroup Inc. (C), Discover, JPMorgan Chase & Co.’s (JPM) Chase Bank and Barclays Plc (BCS) to create a rewards points program at some point later this year.

Other interesting updates included plans to work more closely with Facebook Inc. (FB) and news that PayPal could soon be about to accept crypto — the company said it is testing certain applications with blockchain.

PayPal’s shares rose 1% in pre-market trading.