PayPal Stock Is Trading Higher: What's Going On?

PayPal Holdings Inc PYPL shares are moving higher Tuesday. The company entered into an exclusive multi-year relationship with KKR and announced plans to allocate approximately $1 billion to share repurchases this year. 

What Happened: PayPal and KKR signed a multi-year agreement in which KKR agreed to purchase up to €40 billion ($43.67 billion) of buy-now-pay-later loan receivables from PayPal. 

Under the terms of the agreement, KKR will acquire substantially all of the European buy-now-pay-later loan portfolio on PayPal's balance sheet at the close of the transaction. The company will also acquire future originations of eligible buy-now-pay-later loans.

"Our collaboration with KKR will allow us to accelerate our PayPal Pay Later originations alongside market demand in Europe while preserving free cash flow for other strategic initiatives," said Gabrielle Rabinovitch, senior vice president and acting CFO of PayPal.

The transaction is expected to close in the second half of 2023. PayPal expects it to initially generate approximately $1.8 billion in proceeds, which it will use for a combination of increased capital return to shareholders and general corporate purposes.

PayPal said it will allocate approximately $1 billion to incremental share repurchases this year, which will contribute to approximately $5 billion in total share repurchases in 2023.

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PYPL Price Action: PayPal shares were up 1.61% at $67.50 at the time of publication, according to Benzinga Pro.

Photo: courtesy of PayPal.