Liquid Alternatives: “Paypal’s Business Took Off” (Morgan Stanley); ETFs to Play

May 11, 2020 | Liquid Alternatives

Lockdowns and social distancing ushered in a new paradigm for digital payments, and PayPal will benefit hugely.

PayPal (NASDAQ: PYPL) has been on a high after it declared its Q1 numbers and President and CEO Dan Schuman revealed on the earnings call that April turned out to be the payments giant’s strongest month since its IPO. Here’s a look at ETF’s that could benefit from an uptrend in the stock.

Analysts wax bullish on PYPL

“As consumers settled into modified behaviors after implementation of social distancing measures, [which] started in the US and Western Europe in March, PayPal’s business really took off,” Morgan Stanley analysts said in a note. (Benzinga, via Yahoo Finance)

“The market increasingly looks to PYPL as one of the clear secular winners on the other side of the current crisis with the anticipation of higher earnings power warranting higher valuations,” Wells Fargo analysts said.

It may be recalled Schuman said that on May 1, the company reported its largest single day of transactions in its history, larger than last year’s transactions on Black Friday or Cyber Monday.

He also said the company anticipates adding 15 million to 20 million new accounts in Q2 and expects strong EPS and free cash flow growth in that quarter.

ETFs that hold PayPal and could benefit from the stock’s move higher

ETF Name Ticker Exposure % to PayPal Expense Ratio
ETFMG Prime Mobile Payments ETF NYSEARCA: IPAY 8.17 0.75%
First Trust US IPO Index Fund NYSEARCA: FPX 6.38 0.58%
Global X FinTech ETF NASDAQ: FINX 5.97 0.68%
SPDR SSGA Gender Diversity Index ETF NYSEARCA: SHE 5.99 0.20%
Tortoise Digital Payments Infrastructure Fund BATS: TPAY 5.42 0.40%
Source: (ETFs holding PayPal)

 Related Story:  FinTech: April Was PayPal’s Strongest Month Since its IPO; “We will Hasten the Demise of Cash”

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