2 Earnings You Have to Watch
Here’s an exercise I haven’t done for a couple of quarters now. I always used to write about two earnings reports for the following week that stood out for me. Not just because I follow the stocks but these are usually crucial earnings reports for these companies. I thought I would do this for next week because I see that there are quite a few companies that I am interested in that are reporting their earnings. No, it’s not Apple or Amazon, it’s two fintech stocks that are heading in opposite directions in terms of investor sentiment.
PayPal (NASDAQ: PYPL)
You know when everyone hates a stock, it’s time to consider buying it. When sentiment gets this low it usually means it’s near the bottom. With PayPal, it had a mixed earnings report last quarter. That wasn’t all that bad, investors can usually forgive a mixed report. But when PayPal provided weak guidance for the rest of the year, that’s when investors sold the stock.
Since then, PayPal has been mired in a tight range. It’s basically flat for the year, which means it has underperformed the NASDAQ by about 38%! That’s right PayPal has missed out on this entire rally. Why? Because everyone started to hate the stock. Is it really so bad? PayPal is still the undisputed king of payment apps. It has an estimated 43% of the global market share in digital payments. But it is growing at a slower pace than peers like Block (NYSE: SQ) who is also reporting earnings next week.
There is also a murky future with long-time CEO Dan Schulman retiring at the end of this year. Who will his successor be and will they be able to right the ship? I don’t know how well PayPal will report, but it’s at the point where the stock is so low that it likely won’t go much lower. I’ll be watching closely for signs of life.
SoFi (NASDAQ: SOFI)
Before you even wake up on Monday, SoFi will be reporting its second-quarter earnings report. SoFi seems to get lumped in as a student loan company. While it does provide student loans, it has a lot of other dimensions to be bullish on. Its personal banking sector has seen staggering growth this year as consumers look to its high-interest yields compared to traditional banks.
There is also an outside chance that SoFi reaches profitability this quarter. If not on this report, many are expecting it over the next year. That turns SoFi from a fintech growth company to an established bank with high potential growth in the future. From there, SoFi can begin expanding its services and even consider paying out a dividend at some point. There is no doubt SoFI has already seen considerable growth in its stock price this year. But with a good quarterly report on Monday, it could be the last time we see SoFi trading in the single digits.
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