Wall Street Amped Up for PayPal's (PYPL) First Quarter as Independent Company

PayPal (NASDAQ: PYPL) will report its first quarter as an independent company post spin-out today after the close. Bob Peck from SunTrust Robinson Humphrey published an earnings preview detailing the issues that are likely to be brought out on the call. The analyst expects a confident tone and solid results/guidance.

Upward pressure on volume, downward pressure on take rate. Braintree disclosed that 2015 payment volume will exceed $50B, up >120% y/y and an acceleration from 90% in 2014. Customers include Uber, Airbnb (private), OpenTable, Pinterest, and Jet.com. Braintree also disclosed that Venmo processed $1.6b in payments in 2Q15, up 247% y/y. The competitive data points shows the industry is expanding but the increased competition should also reduce take rates.

New markets: According to CNBC, PYPL is getting into online gaming in the U.S., working with four "leading" operators. According to Forbes, U.S. online gaming is expected to grow to $7.4b by 2017 and fantasy sports is a $15B market per the Fantasy Sports Trade Association.

Key topics to watch for on the call:

1) Transaction processing volume growth

2) Declines in take rates and margin expansion

3) Braintree: Uber (private) concentration/retention and competition from Stripe (private), AdYen (private)

4) Venmo monetization

5) Details on Xoom (XOOM, $24.93, NR) acquisition (our note here: LINK)

6) In-store and large merchant progress

7) long-term impact from networks’ tokenization

8) mobile wallet competition from companies such as Apple Pay (AAPL), Android Pay (GOOGL), Samsung Pay, Chase Pay (JPM)

Street Consensus is for $2.27B and $0.29.

The analyst reiterated a Buy rating and $45 price target on PYPL.

For an analyst ratings summary and ratings history on PayPal click here. For more ratings news on PayPal click here.

Shares of PayPal closed at $35.94 yesterday.

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