In the post COVID-19 pandemic world, cash will be king... digital cash, more precisely.
And for digital payments giant PayPal, that new reality is one of the primary reasons why its stock is now hovering around a record high while the global economy has fallen off a cliff due to the health crisis.
“I do think that COVID-19 has fundamentally changed some consumer behaviors, which I think certainly play to our benefit. As we look at the environment right now — and for all the real personal and economic concerns around coronavirus — our platform is more relevant than ever before,” PayPal CFO John Rainey said on Yahoo Finance’s The First Trade.
PayPal hasn’t been totally immune from the effects of the coronavirus, which has led to the closure of scores of businesses in the U.S. and a sharp slowdown in consumer spending globally.
The company reported Wednesday evening that first quarter net sales rose 13% to $4.62 billion, cooling from an 18% growth rate in the fourth quarter. Total payment volume increased 19% to $191 billion —in the fourth quarter it grew 22%.
Non-GAAP operating income fell 3% from the prior year. The company took a $237 million hit to operating profits due to an increase in credit reserves (thank you, macro slowdown). Adjusted earnings came in at 66 cents a share, missing estimates for 75 cents a share.
But PayPal did just enough to counter investor concerns that business would be heading in the wrong direction amidst a global recession.
The company said it added 7.4 million net new accounts in April, up 135% year-over-year. Sales growth re-accelerated in April to 17%. For the second quarter, PayPal sees net new active accounts growing by 15 million to 20 million. In the first quarter, PayPal added 10 million net new active accounts.