PayPal Holdings on Tuesday said activist investor Elliott Management has an over $2 billion stake in the fintech company and the firm raised its annual profit guidance.
PayPal shares shot up nearly 12 percent after it also
announced a slew of moves including appointing Blake Jorgensen as new chief
financial officer and a $15 billion repurchase programme.
The fintech company has "an unmatched and
industry-leading footprint across its payments businesses," said Jesse
Cohn, a managing partner at Elliott, a day after the investment firm disclosed
a similar stake in Pinterest.
PayPal, which was among companies that won big during the
pandemic, saw shares wipe out over 70 percent of their market value in a year
as e-commerce growth retreated from pandemic-era records.
"Considering the stock's meaningful underperformance
over the last nine months, this may be enough to satisfy investors, who have
lost some measure of faith in management credibility after so many downward
revisions," said Jason Benowitz, senior portfolio manager at Roosevelt
Investments.
PayPal also expects to reduce headcount to cut back costs
and said it estimates annual revenue to grow at 11 percent on an FXN-basis, its
lower end of previous guidance of ~11 percent and 13 percent.
"PayPal let an activist investor inside the tent with
an information sharing agreement. We expect the company to materially refresh
its top management layer and make tough choices to improve profit
margins," said Benowitz.
The company also announced a slew of moves including
appointing Blake Jorgensen as Paypal's new chief financial officer and a new
$15 billion repurchase programme. Blake, who takes over the role on Wednesday,
joins PayPal from Electronic Arts.
The company reported a lower adjusted profit of 93 cents per
share for the three months ended June 30, that comfortably beat estimates of 86
cents a share.
It raised its adjusted profit expectations to between $3.87 and $3.97 per share for the year, up from its
previous forecast of $3.81 and $3.93 © Reuters
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