Will PayPal’s Earnings Announcement Halt Its Bleeding?

PayPal Holdings, Inc. (#PayPal) is scheduled to release its earnings for the fiscal Quarter ending Dec 2021 on 1^st February (Tuesday), after market close.

In general, the largest digital payment platform under-performed in 2021, with its share price closing down 63% off its highs ($309.47) seen in July. Reasons the price fell include slowdown of revenue growth, rising expenses, disappointing company sales guidance for 2022, performance not on par with the market’s elevated expectations, overvaluation etc.

Figure 1: Reported Sales and EPS versus Analyst Forecast for PayPal. Source: money.cnn

In the upcoming Q4 report, consensus estimates for sales stand at $6.9B, up over 11% (q/q) and 13% (y/y) respectively, whilst EPS is expected to hit $1.12, up 0.9% (q/q) and 3.7% (y/y).  Despite undergoing a heavy sell-off till today, analysts remain a strong buy rating on the company. A detailed explanation on the stock’s valuation has been done by Cramer in terms of CAGR estimates: the CAGR is valued at +4.10%, rating PayPal a “Hold” in contrast to most analysts, as CAGR estimates rate a company a “Buy” if the CAGR is above 12%, or a “Sell” if the CAGR is below 4%.

Figure 2: Number of PayPal’s Total Active User Accounts from Q1 2010 to Q3 2021 (in millions). Source: Statista

According to MBLM’s study on brand intimacy based on emotional connections in the second year of the pandemic, PayPal has been ranked second in the financial industry, outpacing its competitors such as Visa and Mastercard, as well as other major banks. This suggests PayPal remains a strong preference for most consumers considering the positive emotional connections that have been established. Up to Q3 2021, number of PayPal active users reached 416 million, up over 4.9 times from Q1 2010.

Also, there are a few research-based fundamental metrics that may support the positive outlook for PayPal, such as high EPS rating (82/99) and an A SMR rating (representing the top 20% of companies).

In November last year, PayPal announced a team up with Amazon, allowing the latter’s US clients to pay with Venmo (a mobile payment service owned by PayPal). Besides the usual money-transfer services, Venmo also offers an in-app cryptocurrencies buying/selling service, which may help in further improving the company’s competitiveness in the financial sector.

#PayPal has been traded in a strong downtrend since its failure to break above $310 in July 2021. To date, the company’s share price has pared its gains by 47.2%, below $168.90 (FR 61.8%). This level serves as an immediate resistance. Based on the indicators, MACD fast and slow lines hovered below 0 line, while RSI and Stochastics showed signs of rebound from the oversold zone. If a bullish breakout is successful, the next target should be $195.75 (FR 50.0%) and $222.60 (FR 38.2%). The latter also intersects with 100-day SMA and the downtrend line – a strong confluence zone in which a break above may indicate a change in the current trend direction. On the other hand, if bearish pressure persists, the first support is $130.70 (FR 78.6%). Breaking below this level would open up an opportunity for the share price to continue testing the psychological level $100, and the lows in March 2020 at $82.

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Larince Zhang

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Market Update – January 31 – USD & Stocks hold gains plenty of risks around

Stock markets rallied (+2.43%) Friday, Asia markets are higher (Nikkei +1.4%) in thin Lunar Holiday trading,  USD & Yields & Oil all remain bid with Gold heavy. Markets have a busy week ahead, with China closed, tensions in Ukraine/Russia not subsiding and North Korea firing missiles into Sea of Japan.

BOE, ECB, RBA,  ISM PMI’s, and NFP on Friday

• USD (USDIndex 97.10) holds 1.7% gains forthe month
• US Yields 10-yr moved closed at 1.782 &  trades at 1.785%.    
• Equities – USA500 +105 (+2.43%) 4431 – (APPLE +6.98%) USA500 FUTS hold 4428.     
• USOil – Breached $87.00  on Friday now at at 86.30 
• Gold – down to $1788 afrom highs over $1850 last week   
• Bitcoin remains under $40,000 back to test $37 100, 
• FX markets – EURUSD back to .1.1170 USDJPY now 115.40 & Cable back to 1.3433. 

Overnight – Chinese Factory data missed & Japanese Consumer confidence, Housing Starts and Construction spending all missed significantly too.

European Open – The March 10-year Bund future is up 31 ticks, underperforming versus Treasury futures, which are also in the red, however. European stock futures meanwhile are higher, with the DAX up 1.3% and set for a strong rebound after the sharp sell off on Friday that came in the wake of weaker than expected German GDP numbers. Still, risk appetite remains supported ahead of BOE & ECB this week.

Today – German CPI, EZ GDP (Flash, Prelim.), Speeches from Fed’s Daly & George.

 

Biggest FX Mover @ (07:30 GMT) AUDCHF (+0.92%) Rallied from 3 day fall at 0.6490 to 0.6560 now. MAs aligned higher, MACD signal line & histogram rising  over 0 line RSI 65 & rising,  H1 ATR 0.00125 Daily ATR 0.0060.

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Stuart Cowell

Head Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our written permission.

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OIL, H4 | Potential For Dip

Type: Bearish ReversalKey Levels:Resistance: 90.248Pivot: 89.066Support: 85.537Preferred Case:Prices are consolidating in an ascending triangle. We see the potential for a dip from our Pivot at 89.066 in line with 127.2% Fibonacci extension and 161.8% Fibonacci projection towards our 1st support at 85.537 in line with 61.8% Fibonacci extension and 78.6% Fibonacci retracement. Divergence is spotted on RSI, supporting our bearish bias.Alternative Scenario:Alternatively, prices may climb towards our 1st resistance at 90.248 in line with 78.6% Fibonacci retracement.

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AUDJPY, H4 | Potential For Dip!

Type: Bearish ReversalKey Levels:Resistance: 81.273Pivot: 80.932Support: 80.237Preferred Case:Prices are on bearish momentum and abiding to our descending trendline. We see the potential for a dip from our Pivot at 38.2% Fibonacci retracement towards our 1st support at 80.236 in line with 127.2% Fibonacci extension. Prices are trading below our ichimoku clouds, further supporting our bearish bias.Alternative Scenario:Alternatively, prices may climb higher towards our 1st resistance at 81.273 in line with 61.8% Fibonacci Retracement and 23.6% Fibonacci retracement.

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GBPCAD, H4 | Bearish Continuation

Type: Bearish DropKey Levels:Resistance: 1.71354Pivot: 1.70912Support: 1.69632Preferred Case:Price is reacting in the descending channel, signifying an overall bearish momentum. We can expect price to drop from pivot level in line with 127.% Fibonacci projection towards 1st Support in line with 127.2% Fibonacci projection and horizontal support. Our bearish bias is further supported by the stochastic indicator where the %K line dropped from the resistance level.Alternative Scenario:Alternatively, price can push higher up to 1st Resistance in line with 161.8% Fibonacci projection and 127.2% Fibonacci extension.

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Ruble Forecast: Potential Drop Ahead?

Good day,Having tested a very strong psychological level of 80.00, the Russian ruble is undergoing correction. The price of USD/RUB should drop although it might recover next to the level of 76.00 and uptrend, and jump. So far, the correction is ongoing.Gold has approached the daily uptrend and supporting level of 1780. The price of gold is likely to jump till the level of 1840, however, the asset might also break this level and drop. So, it is worth observing what is going to happen next.Oil is targeting the level of 96.00 away from which it might drop. Pulling back from the resistance at the level of 96.00, oil might also jump depending on the situation in the market.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/ruble-forecast-potential-drop-ahead-31-01-2022"
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BTCUSD, H4 | Bearish Continuation

Type: Bearish ReversalKey Levels:Resistance: 39108.24Pivot: 38223.21Support: 35482.49Preferred Case:Price is abiding to the descending channel, signifying an overall bearish momentum. We can expect price to make a small retracement to pivot level in line with horizontal resistance and drop to 1st Support in line with 61.8% Fibonacci retracement and 100% Fibonacci projection. Our bearish bias is further supported by rsi dropping at resistance level.Alternative Scenario:Alternatively, price could push further up towards 1st Resistance in line with 61.8% Fibonacci projection.

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USDCAD, H4 I Potential Rise!

Type:Bullish BounceKey Levels:Resistance: 1.28479Pivot: 1.27396Support: 1.26503Preferred Case:With prices moving above the Ichimoku cloud, we see the potential for a bounce from our pivot at 1.27396 in line with Horizontal overlap support and 23.6% Fibonacci retracement towards our 1st resistance at 1.28479 in line with horizontal swing high resistance and 127.2% Fibonacci extension .Alternative Scenario:Alternatively, price may break pivot structure and head for 1st support at 1.26503, in line with 61.8% Fibonacci retracement and horizontal overlap support.

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Dollar Down, Investors Await Central Bank Meetings

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Dollar near 18-month high ahead of bumper central bank week

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Crypto giant Binance restricts 281 Nigerian accounts

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Key Economic Events and Reports of the Week Ahead

The Fed held a meeting this week and signaled that it will conduct monetary policy tightening much faster than its peers and faster than market participants expected. Now rumors are centering around a possible Fed rate hike at the next meeting by 50 bp.Next week the decision on the interest rate will be made by the Bank of England and the RBA. Both central banks are expected to raise rates in response to inflation, which should have a positive impact on the GBP and AUD, as the Banks are likely to hint that they will continue their tightening cycles. In addition, the decision on monetary policy will be taken by the ECB and there is a high risk that its passive stance will drive Euro decline towards 1.10 against the dollar.The NFP report closes next week's economic calendar and strong job growth should strengthen the likelihood of a 50bp Fed rate hike in March, potentially helping USD to resume the rally.

from Tickmill Expert Blog - Forex Traders Blog https://www.tickmill.com/blog/key-economic-events-and-reports-of-the-week-ahead-30-01-2022"
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The state-backed “gigafactory”: all aboard the next Concorde

The government’s ambition of creating new industries, levelling up the regions and turning post-Brexit Britain into a tech powerhouse has generated lots of rhetoric so far, but not much in the way of concrete plans.

Last week, we finally saw an actual decision. The business secretary, Kwasi Kwarteng, announced that the ambitious start-up Britishvolt would get £100m of state funding to help it build a vast new factory to make the batteries for electric cars in Northumberland. The gigaplant has the potential to make batteries for 300,000 cars a year, creating 3,000 skilled jobs on the site, and another 5,000 among suppliers. If it all goes according to plan, it will make the UK a player in the battery industry. 

Danger: high-voltage risk

Of course, everyone wishes Britishvolt well. There is no question that the world will need lots of car batteries. The market for electric cars is exploding. Tesla already makes one of the best-selling models in the UK and every major car manufacturer is pouring billions into creating new models. In a decade, petrol-powered cars may well be a historical relic. But just because an industry is huge doesn’t mean it can be profitable. The battery business faces some big challenges. 

First, soaring raw-material prices. Batteries that are powerful enough to drive a car have lots of metals inside them, many of which are in short supply. Lithium is the most crucial, and the price has more than doubled over the last ten years. Cobalt and nickel are almost as important, and miners are struggling to keep up with soaring demand. Building a huge new plant is one thing. Getting the supply chains in place to feed in all the raw materials will be far harder. There will be a constant threat of shortages and rising prices destroying any profit margin that might otherwise be there. 

Second, we are about to see massive overinvestment. Just about every other country in the developed world is trying to get into battery production. French president Emmanuel Macron is putting €700m into a plan to develop a domestic battery industry. The German government is putting in €1bn. The EU has launched a European Battery Alliance to funnel subsidies into plants across the continent.

On the other side of the Atlantic, US president Joe Biden is spending billions on developing the American industry, with huge subsidies for US manufacturers, along with subsidies for charging networks.

It is not hard to work out what is about to happen. In a few years’ time, there will be far too many batteries being produced by companies that have been massively subsidised to ramp up production. That is great for anyone thinking of buying a new car. But with prices falling and many state-owned companies selling at below cost price, it will be terrible for manufacturers. 

A fast-moving target

Finally, the technology behind electric vehicles is still developing very rapidly, and so are customers’ preferences. Is a 400- or 500-mile range crucial, or does it not make much difference, given that most of us typically only drive ten or 20 miles a day? Will rapid charging make it irrelevant anyway? Will we actually own an electric car, or prefer simply to borrow one on an app when we actually need it? The market has not decided yet, but it will make a huge difference to the type of batteries that are in demand. 

Likewise, we hardly even know what materials will be used. For example, India’s giant Reliance Industries is spending big money on developing sodium- rather than lithium-based batteries, including on the acquisition of UK-based Faradion, a specialist in the technology. Sodium is far cheaper than lithium, and there is plenty of it in the world. Until the answers to these questions become clear, it is impossible to know what batteries will be needed, with what capacity, and what they will be made of. 

In truth, many of the state-backed battery plants have the potential to turn into massive white elephants. We have plenty of history to tell us that governments are typically very bad at making those kinds of strategic choices. They back the wrong technologies and spend too much money at a time when everyone else is getting into the market. This gamble could turn out to be a 21st-century Concorde.

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Gold Pressure Set to Remain Under Pressure Because of Hawkish Fed

Gold prices fell to a three-week low on Friday and could see their worst weekly performance since late November as the dollar rallied after the Fed signaled a rate hike in March.The Federal Reserve on Wednesday signaled it was likely to raise US interest rates in March and reaffirmed plans to stop buying bonds later that month before launching a major balance sheet cut.An increase in the interest rate will increase opportunity cost of holding zero-yield gold. The market appears to be targeting the $1,800 level, which is acting like a giant price magnet. And we seem to be continuing to revolve around it. Dollar strength and rising yields put pressure on the precious metal.The World Gold Council (WGC) expects demand for jewelry, small bars and coins to remain strong in 2022, with central banks "continuing to buy gold, but at a slower pace than in 2021."

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