🔥 PayPal profits surge

Good morning Investor. “There are three ways to make a living in this business: be first, be smarter, or cheat.”

— John Tuld, Margin Call

MARKET UPDATE

Shares of AMD dropped 3% after hours thanks to slowing demand in its embedded, data centre and gaming segments. Shares of Pinterest shot up 19% after hours thanks to upbeat revenue forecasts.

TODAY’S BIG HEADLINES

• PayPal profits from consumer spending

• Amazon is an advertising giant

• Eli Lilly’s drug demand soars

• Boycotts are hurting McDonald’s

EARNINGS RESULTS

PayPal profits from consumer spending🔥

The Comeback Kid: Despite PayPal’s (PYPL) previous quarter’s performance being as shocking as a decaf espresso, the company has bounced back like a caffeinated kangaroo this time around. Thanks to a 14% increase in transaction volumes which was a result of consumers spending like they’ve found a forgotten credit card, PayPal has managed to beat both top and bottom line expectations.

The Figures: PayPal raked in $7.70 billion in revenue, a 9% YoY increase that left analyst expectations of $7.51 billion in the dust. Earnings per share strutted in at $1.40, a 20% YoY increase that outshone expectations of $1.22.

Times Are Changing: In a move as refreshing as a summer breeze, management has revamped their “non-GAAP” metrics to include the impact of stock-based compensation (SBC). With this new addition, non-GAAP EPS has shot up by 27% year-over-year, leaving the company’s single-digit growth guidance looking rather sheepish.

Margin Expansion: PayPal’s Transaction Margin expanded by 4%, while their Non-GAAP operating margin expanded by 84 basis points. The company also took full advantage of their suppressed stock valuation, repurchasing $1.5 billion worth of shares, which fueled a higher EPS growth rate faster than a sports car on rocket fuel.

Oracle’s Crystal Ball: PayPal’s management have provided guidance for the rest of the year, stating that they’re expecting mid-to-high single-digit growth in adjusted earnings per share. This is a significant upgrade from their previous “flat as a pancake” growth forecast.

Wall Street Whispers: Shares of PayPal rose almost 6% in pre-market trading, a stark contrast to some other fintech space dwellers such as Adyen (ADYEN) and SoFi Technologies (SOFI) who both saw sizable drops after reporting earnings. It seems PayPal is the cat that got the cream this time!

SPONSORED BY RYSE

Invest before this company becomes a household name

What if you had the opportunity to invest in the biggest electronics products before they launched into big box retail, would you?

Ring changed doorbells and Nest changed thermostats. Early investors in these companies earned massive returns, but the opportunity to invest was limited to a select, wealthy few. Not anymore. RYSE has just launched in 100+ Best Buy stores, and you're in luck — you can still invest at only $1.50/share before their name becomes known nationwide.

They have patented the only mass market shade automation device, and their exclusive deal with Best Buy resembles that which led Ring and Nest to their billion-dollar buyouts.

Learn how you can become a shareholder.

EARNINGS RESULTS

Amazon is an advertising giant☁️

The Showstopper: In a week where the Fed’s rate decision was the main act, Amazon’s (AMZN) quarterly earnings results were the surprise encore. Released after the market closed, they didn’t just meet expectations - they drop-kicked them into next week. Both revenue and profits soared, showing off Amazon’s cloud and advertising business segments like proud peacock feathers.

A Bounty of Good News: Here’s the lowdown on Amazon’s earnings:

• Revenue hit a whopping $143.3 billion, up 13% YoY and leaving analyst expectations of $142.5 billion eating dust.

• EPS clocked in at $0.98, up a staggering 216% YoY and outpacing expectations of $0.83.

• AWS revenue grew 17% to $25 billion, exceeding expectations and hitting a $100 billion annual revenue run-rate. Meanwhile, competitors Google Cloud and Microsoft Azure grew 28% and 31% respectively.

• Advertising revenue was a solid $11.8 billion, in-line with expectations and up 24.21% YoY. Advertising, the high margin business, now makes up a not-too-shabby 8.23% of total revenue.

A Dash of Reality: However, it wasn’t all rainbows and unicorns for the e-commerce titan. Management forecasted more cautious spending in the second quarter as customers of its cloud computing division sharpen their cost-cutting scissors. And despite Wall Street’s hopeful whispers of a quarterly dividend announcement, Amazon remained tight-lipped. This leaves only Amazon and Tesla (TSLA) as the two members of the Magnificent Seven who don’t pay a dividend.

Wall Street Whispers: Shares of Amazon rose as much as 6% after hours, a welcome sight after a red day on Tuesday where the stock ended the day down 3.3%. It seems Amazon’s performance was the silver lining investors were looking for!

EARNINGS RESULTS

Eli Lilly’s drug demand soars💊

Winner, Winner, Chicken Dinner: On Tuesday morning, before the market opened, drugmaker Eli Lilly (LLY) reported earnings results for the first quarter. They beat profit expectations but missed on revenue due to strong sales of their Zepbound and Mounjaro drugs. It seems like they’ve got the recipe for success, but perhaps they need to add a bit more spice to their revenue!

The Figures: Eli Lilly reported revenue for the quarter of $8.77 billion, up 26% YoY but below expectations of $8.92 billion. Meanwhile, the company reported adjusted EPS of $2.48, up 66% YoY and above analyst expectations of $2.29 per share. Sensational growth for a company of this size!

Production Expansion: Eli Lilly is currently pulling out all the stops to ramp up their production capacity. They’re trying to meet the overwhelming demand for its blockbuster diabetes drug Mounjaro and its weight-loss sensation Zepbound, which has just completed its first full quarter in the US market. The CEO stated that the ramping up of production is “capital intensive, it’s technically complex and highly regulated“. Sounds like they’ve got their work cut out for them!

Down the Road: The drugmaker also increased its full year guidance off the back of these strong results, forecasting an adjusted EPS of $13.50-$14.00 per share, up from previous guidance of $12.20-$12.70. As for revenue, the company is expecting $42.4-$43.6 billion, an increase of $2 billion at either end of the range. Predicting a pot of gold at the end of the rainbow!

Wall Street Whispers: Shares of Eli Lilly rose over 5% in pre-market trading following these positive earnings. Meanwhile, shares of their largest competitor Novo Nordisk (NVO) were also up in anticipation of their earnings later this week. It seems the pharmaceutical sector is heating up faster than a spoon in a microwave!

EARNINGS RESULTS

Boycotts are hurting McDonald’s🍔

Burger Blues: McDonald’s (MCD), the beloved burger joint that has more arches than a Roman aqueduct, reported their quarterly earnings results before the market opened on Tuesday. It seems their performance was as flat as their patties, missing sales and profits expectations. The culprits? Inflationary pressures that hit harder than a forgotten jalapeno and boycotts relating to the Middle East conflict. Global same-store sales growth was a modest 1.9% YoY, compared to the 2.33% expected by analysts, which was primarily driven by price increases.

The Figures: McDonald’s reported revenue of $6.17 billion, which was in line with expectations and up 4% YoY - not exactly a Happy Meal for investors, but not a Filet-O-Fish disaster either. Net income was a respectable $1.93 billion, representing a 7% growth rate. Earnings per share were $2.70, just a smidgen below analyst estimates of $2.71, and only up a rather unimpressive 2% YoY. However, this growth rate beefs up to 9% when you remove one-off “pre-tax charges of $35 million and $180 million for the current year and prior year, respectively, primarily related to restructuring”. It seems the company’s new growth strategy is still cooking on the grill.

Wall Street Whispers: These earnings results led to the stock initially selling off in pre-market trading, like a kid who dropped his ice cream cone. But fear not, Ronald McDonald fans, the stock rallied back into positive territory once the market opened, proving that it’s not all doom and gloom in the land of the Big Mac.

MORE NEWS

Additional market-moving events🌎

• Southeast Asian Boom : Microsoft are set to pump a whopping $1.7 billion into Indonesia for AI and cloud projects. (Fortune)

• IKEA Cuts Prices Again: IKEA has begun rolling out its third round of price cuts in a 12 month period to help ease its customers inflation pain. (Fortune)

• The Venice Tourist Tax: The Italian tourist hotspot that is Venice have officially rolled out their much contested “entry-fee” which is effectively a tax on tourists of €5 per day. (Independent)

• RGB Masks Sell Like Hotcakes: Razer Inc has made a million dollars in sales through selling a mask with RGB lights, drawing the attention of the FTC. (The Verge)

REFERRAL PROGRAM

Get a Birthday Shoutout!🎁

You can get Free Stuff for referring friends & family to our newsletter 👇️ 

{{rp_personalized_text}}

Or copy & paste this link: {{rp_refer_url}}

Note: you’ll need to tell us your name & birthday by clicking here.

EARNINGS

This Week’s Earnings Calendar📅

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500.

Here’s how the two stocks have performed since then:

• Evolution AB: 1,232.00 SEK (📉-6.13%)

• Hims & Hers Health: $12.53 (📉-13.41%)

Make sure that you’re subscribed so that you don’t miss our next stock picking research report!