PayPal's Strong Q2 Results Put These ETFs In Focus

Digital payment company PayPal (NASDAQ:PYPL) came up with second-quarter 2017 financial results on July 26, after the bell. The company reported adjusted earnings of $0.36 per share, surpassing the Zacks Consensus Estimate of $0.33.

The company reported revenues of $3.136 billion, which came ahead of the Zacks Consensus Estimate of $3.096 billion and increased 18% year over year (or 20% on a currency-neutral basis). PayPal’s net new additions were up 80%, with 6.5 million active customer accounts added in the quarter (read: Will Top ETF Areas of 1H Carry Momentum in 2H?).

Guidance Raised

PayPal has also beefed up its 2017 guidance and expects revenues to grow 18–19% on a currency-neutral basis to $12.775–$12.875 billion. Non-GAAP earnings per diluted share are estimated in the range of $1.80–$1.84. The previous guidance called for revenues in the range of $12.520–$12.720 billion and Non-GAAP earnings per diluted share in the range of $1.74–$1.79.

GAAP earnings per diluted share for 2017 are estimated in the range of $1.32–$1.36 from the prior range of $1.28–$1.33 (read: Buy These ETFs on Reduced Physical Banking).

PayPal also announced a new partnership with Baidu (NASDAQ:BIDU) . “The partnership with Baidu will give Chinese consumers the option to pay with Baidu Wallet and PayPal at PayPal's millions of merchants outside of China,” as per the source.

Market Impact

The overall beat and an optimistic guidance boosted PYPL stock by about 2.2% after hours on July 26. The Zacks Industry and the Sector Rank of PYPL are in the top 35% and 50%, at the time of writing. Also, VGM (Value-Growth-Momentum) score of the stock is ‘B.’

While investing in the PayPal stock is definitely an option to play the potential boom, an ETF route also offers investors a less risky and diversified approach. Below we have detailed five such ETFs that have considerable exposure to PayPal:

Guggenheim Spin-Off ETF (AX:CSD)

This ETF offers targeted exposure to U.S. companies that were spun off within the last four years. The fund has amassed $198 million in its asset base. From a sector look, Information Technology takes the top position. In-focus PayPal occupies about 7.61% share of the fund.

Purefunds ISE Mobile Payments ETF IPAY

This ETF tracks the ISE Mobile Payments Index to provide exposure to the performance of companies engaged in the mobile/electronic payments business. This approach results in the fund holding a basket of 31 stocks. PayPal gets 5.90% weight of the fund. It charges 75 bps in fees and has amassed about $146.3 million in assets.

FinTech Thematic ETF (NS:FINX)

This $9.8-million fund also looks to track companies belonging to the emerging financial technology sector. PayPal Holdings gets 5.78% exposure of the fund. The 29-stock fund puts about 43.6% weight in the data processing & outsourced services while application software (34.1%) and internet software & services (6.6%) round out the next two spots.

First Trust US Equity Opportunities ETF (V:FPX)

This ETF targets the U.S. IPO market and follows the IPOX-100 U.S. Index. It has accumulated $855 million in its asset base. In total, the fund holds 101 securities in its basket with 6.18% share going to PayPal Holdings.

First Trust Dow Jones Internet Index FDN

In total, the $4.7-billion fund holds 42 stocks in its basket with the in-focus PayPal Holdings taking the fourth spot with 5.09% share (read: eBay Slumps on Slower Growth: What About ETFs?).

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