Online payments pioneer PayPal (NASDAQ:PYPL) posted second-quarter earnings Wednesday that exceeded Wall Street’s profit and revenue estimates as it widened its reach with four acquisitions.
But investors pushed down PayPal shares in after-hours trade by 3.2% to US$88.42 after its third-quarter revenue forecast dipped below analysts’ average estimate.
On a per-share basis, PayPal earned 58 cents on revenue of US$3.86bn, which zipped past analysts’ estimates of 57 cents on revenue of US$3.81bn.
However, its projection for third-quarter revenue of US$3.62bn to US$3.67bn fell short of the consensus estimate of US$3.71bn.
As part of its round-up of announcements, the online payment group also said its board is giving the green light to up to US$10bn in share buybacks.
During the second quarter, PayPal embarked on the acquisition trail as well, with the takeovers of iZettle, Hyperwallet, Simility and Jetlore.
"We are pleased to have announced four acquisitions in the second quarter that advance our merchant value proposition and geographic reach,” said CEO Dan Schulman in a statement.
Read: PayPal stumps up US$2.2bn for iZettle
Earlier this week, the activist investor Daniel Loeb, who runs the hedge fund Third Point, announced that his fund had acquired a new stake in PayPal during the second quarter. He is predicting that its share price will rise to US$125 within the next year and a half.
Read: Investor Daniel Loeb's Third Point takes stake in PayPal
“We see parallels between PayPal and other best-in-class internet platforms like Netflix and Amazon: high and rising market share, untapped pricing power, and significant margin expansion potential,” Loeb wrote to his investors.
PayPal added 7.7 million new accounts in the quarter on a net basis. Another bright spot was that transactions on its mobile app Venmo swung to $14 billion, which represents a 78% jump from the year-ago quarter.
Contact Ellen Kelleher at ellen@proactiveinvestors.com