August 15th, 2023 | 05:35 CEST
PayPal, Smartbroker Holding AG, Block - Fintech between hope and apprehension
Table of contents:
"[...] In Canada, there is $1.75 of debt for every dollar of disposable income - and that was true even before the pandemic. [...]" Karim Nanji, CEO, Marble Financial
Smartbroker Holding AG - Strong vote of confidence
The Berlin-based company is fine-tuning its efforts to ensure the timely and smooth launch of Smartbroker+, the latest generation broker. The fact that they are likely on track is evidenced by the recent insider purchases made by various individuals within the Company. Thus the two supervisory board members René Krüger and Marcus Seidel already bought Smartbroker shares at the end of July. The AKD Private Equity GmbH, the holding company of the Chairman of the Board, André Kolbinger, followed suit on July 25th, acquiring shares worth EUR 161,500 at an average price of EUR 8.50 per Smartbroker share. Last week, Kolbinger deposited another EUR 57,115.86 from his private coffers and paid EUR 9.14 per share.
At the end of last month, first teaser images of Smartbroker+ were published, showing the integration of new functions and optimized according to the latest customer requirements. It can be clearly seen here that around a quarter of a century of concentrated community experience of the Smartbroker Group has flowed into the development, especially through its four popular stock market portals wallstreet-online.de, boersenNews.de, FinanzNachrichten.de and ARIVA.de. The revamped dashboard, watchlists and financial overviews are state-of-the-art. A new onboarding process is also designed to make opening a securities account faster and easier.
According to company management, the Early Access phase will be launched shortly. During this phase, both the Android and iOS apps and the desktop version can be tested. Initially, all German trading venues will be available. Subsequently, the proven Smartbroker offering will be integrated step by step, with the transfer of custody account balances planned for October. With the introduction of a smartphone app, a cutting-edge desktop application and the services of a traditional broker, Smartbroker Holding AG is set to distinguish itself significantly from other neobrokers upon its launch.
The Smartbroker share recently established itself above the EUR 10 mark. A break of the annual high at EUR 10.55 should bring further momentum into the upward movement. There would then be room for movement at least to the downward trend established since June 2021, which currently runs at EUR 11.35.
PayPal - Back on track
In recent weeks, the chart of the payment service provider PayPal has also been promising. After the break of the downward trend established since August 2022 at USD 69.60, the way to new annual highs at USD 88.60 seemed paved. The US company made it to an interim high of USD 76.54 but then came the shock with the announcement of the figures for the second quarter, which destroyed the chart picture for the time being and, by tearing open a decisive downward gap, made new lows at USD 58.95 likely. A break of this support area could trigger a prominent sell signal with a possible sell-off to the area of around USD 40.
Investors and analysts were particularly disappointed by the operating margin of 21.4% in the second quarter. The original target for this indicator was at least 22%. The second quarter report showed revenues of USD 7.3 billion, which was at the upper end of forecasts and slightly exceeded the analyst consensus of USD 7.27 billion.
Earnings per share were USD 1.16, slightly above general market forecasts of USD 1.15 per share. In the same period last year, the Company reported earnings of USD 0.93 per share. Furthermore, transaction volume increased by 11%, reaching USD 377 billion. At the end of the quarter, PayPal reported a total of 431 million customer accounts. That represents an increase of two million accounts compared to the same quarter last year but a decrease of two million compared to the first quarter of the current year.
Block - Sell-off despite good figures
A similar fate to PayPal befell mobile payments provider Block, led by Jack Dorsey, after announcing its second fiscal quarter figures, which showed significant year-on-year increases in both revenue and profit. Despite a challenging economic climate, the Company reported net revenue of USD 5.53 billion, up from USD 4.4 billion a year earlier and exceeding Refinitiv's forecasts. The Company's gross profit increased 27% to USD 1.87 billion in the quarter. Of particular note was the performance of Cash App, Block's leading online payment service, which increased its gross profit by 37% to USD 968 million.
The Company's Square business also reported an 18% increase in gross profit to USD 888 million. Dorsey emphasized the Company's ambitions to expand its international footprint and pointed to efforts to cut costs. This led to a slowed hiring policy to focus on critical positions and performance management. Despite this positive news, shares of Block fell about 25% to USD 60.57 since the release of the numbers. A major reason for the decline was the Company's report that gross profit rose only 21% in July, compared to 27% in the second quarter. In addition, analysts pointed to the Company's high valuation in its peer group, even though its growth rate was slipping compared to peers and its profit margins were lagging.
After the Q2 figures, both PayPal and Block were harshly punished. In contrast, the share of Smartbroker Holding AG was able to establish its price above EUR 10. If Smartbroker+ is launched in time, the stock could continue its upward trend.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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