PayPal Invests $50M in Overlooked Entrepreneurs

PayPal (PYPL) has affirmed its commitment to fighting for racial and economic equity by investing in overlooked entrepreneurs. The payment giant will invest $50 million as it looks to create wealth opportunities for diverse founders. The new $50 million investment builds on a similar investment to eight black and Latinx-led venture capital funds late last year. The investment spree is part of PayPal’s $535 million investment plan as it looks to support businesses owned by minorities and members of under-represented communities. PayPal expects the investments to go a long way in enhancing equitability in society as it continues to champion for diversity and a more inclusive economy. (See PayPal stock analysis on TipRanks) “Over the long-term, the $100 million we are investing in 19 exceptional venture capital firms will help to foster the next generation of diverse founders that are building products and services that empower a more inclusive economy,” said PayPal CEO Dan Schulman. In addition to providing the much-needed financing, PayPal will work with the funds to deepen industry ties and provide industry expertise while investing much-needed resources. Mizuho Securities analyst Dan Dolev has reiterated a Buy rating on the stock following an impressive first-quarter report. Dolev stated, “Following a stellar 2020, PYPL showed in 1Q21 that it can comp the COVID e-commerce boom and still outperform expectations by a wide margin. With third-party verification trends accelerating across the board, top and bottom-line beats, and guidance raises despite headwinds, we believe saying that they "crushed it" would be an understatement.” The analyst has a $375 price target on the stock implying 43.47% upside potential to current levels. Consensus among analysts on Wall Street is a Strong Buy based on 20 Buy and 2 Hold ratings. The average analyst price target of $317.50 implies 21.48% upside potential to current levels. PYPL scores 7 out of 10 on TipRanks’ Smart Score rating system, implying its performance is likely to align with market expectations. Related News: Sony’s Strategic Investments to Cost $18B in 3 Years Tesla Sets up Data Center to Store EV Data in China – Report Coinbase Set Sights on Institutional Investors with Coinbase Prime More recent articles from Smarter Analyst: Mondelez to Acquire Chipita for $2B, Expand Bakery Portfolio Workday Beats Analysts’ Expectations in Q1; Shares Down Allscripts to Buy Back $350M in Stock; Shares Jump 5% Amazon Tables $8.45B Acquisition Bid for MGM Read More...


Exxon CEO Is Dealt Stinging Setback at Hands of New Activist

(Bloomberg) — Exxon Mobil Corp. CEO Darren Woods was dealt a stunning defeat by shareholders when a tiny activist investment firm snagged at least two board seats and promised to push the crude driller to diversify beyond oil and fight climate change.For Woods, who had aggressively opposed the insurgents, it was just the latest setback in a rocky 4 1/2-year tenure that has seen what was once the world’s most-valuable company shed more than $125 billion in market value.The vote was unprecedented in the rarefied world of Big Oil and underscores how vulnerable the industry has suddenly become as governments around the globe demand an acceleration of the shift away from fossil fuels. It’s also a sign that institutional investors are increasingly willing to force corporations to actively participate in that transition.Tiny activist investor Engine No. 1, with just a 0.02% stake and no history of activism in oil and natural gas, secured two seats on Exxon’s board in Wednesday’s vote. A third seat may yet fall into the firm’s hands when the final results are tallied. That would put Woods in the tricky position of leading a board that’s 25% under the control of outsiders. Last-minute efforts by Woods and his team to appease climate-conscious investors and rebuff Engine No. 1’s assault were to no avail.“Darren Woods has come from a long line of CEOs that have been very straightforward: it’s our ball, it’s our bat and we’re going to do what we want,” said Mark Stoeckle, chief executive of Adams Express Co., which oversees $2.8 billion in assets. “When you’re the biggest and the baddest you can get away with that. But you have to change with the times. The messaging has been terrible.”Click here to see Bloomberg Intelligence’s ESG data.BlackRock Inc., the second largest holder of Exxon with a 6.6% stake, voted for three of the new directors nominated by Engine No. 1, according to a vote bulletin published Wednesday. The firm said it was “concerned about Exxon’s strategic direction” and that the oil giant could benefit from the addition of the new directors who would “bring the fresh perspectives” to the board.But the investment giant also voted in favor of Frazier and Woods, according to the bulletin — a move that rankled environmental groups who called for the firm to vote against them.The result is one the biggest activist upsets in recent years and an embarrassment for Exxon. For Woods, who was listed as 56 years old in the company’s March proxy filing, the defeat is just the latest black mark since his elevation to CEO in 2017. Exxon has underperformed peers for years and in 2020 its shares cratered by 41% for the worst performance in 40 years. Under his leadership, the company also posted its first annual loss in decades and saw oil production slump to the lowest since the Mobil Corp. merger in 1999. Meanwhile, Exxon’s debt load ballooned as it borrowed to pay for dividends and drilling amid shrinking cash flow.Wednesday’s vote was also striking because of the force with which Exxon battled the activist, which also criticized the company’s financial performance. Exxon refused to meet with the nominees and Woods told shareholders earlier this month that voting for them would “derail our progress and jeopardize your dividend.” The company even went as far as to pledge, just 48 hours before the meeting, that it will add two new directors, including one with “climate experience.”READ: Exxon Activist Battle Turns Climate Angst Into Referendum on CEO“This historic vote represents a tipping point for companies unprepared for the global energy transition,” California State Teachers’ Retirement System, also known CalSTRS, which had supported Engine No. 1, said in a statement after the meeting. “While the ExxonMobil board election is the first of a large U.S. company to focus on the global energy transition, it will not be the last.”What Bloomberg Intelligence SaysThe election of at least two Engine 1 nominees to Exxon Mobil’s board could drive changes to how the oil major allocates capital, permanently changing its investment proposition.– Fernando Valle and Brett Gibbs, BI analystsRead the full report here.In other corners of the commodities sector, shareholders this year have already shown frustration with executives’ reluctance to embrace tough environmental goals. On the same day that Exxon investors met, management at Chevron Corp. were rebuked by their shareholders who voted for a proposal to reduce emissions from the company’s customers. DuPont de Nemours Inc. recently suffered an 81% vote against management on plastic-pollution disclosures, while ConocoPhillips lost a contest on adopting more stringent emission targets.READ: ‘Hidden Gem’ Oil, Gas Stocks Hold Their Own Amid Climate UproarAlso on Wednesday, Royal Dutch Shell Plc was ordered by a Dutch court to slash its emissions harder and faster than planned, a ruling that may have consequences for the rest of the fossil fuel industry.The Exxon meeting proved to be a nail-biting conclusion to a months-long proxy fight. Exxon halted proceedings at one point to allow more time for vote counting. San Francisco-based Engine No. 1 accused the company of making a “last-ditch attempt to stave off much-needed board change.”The successful Engine No. 1 nominees were Gregory Goff, former CEO of refiner Andeavor, and environmental scientist Kaisa Hietala. Earlier this month, Exxon described all four dissident nominees as “unqualified.” Eight Exxon nominees were elected and two board seats remain undecided; one or both of them could potentially go to the activist.Sacrosanct DividendThe result shows a clear dissatisfaction with Woods’ strategy, despite the stock’s rally this year, up by 43% due to surging oil prices.Exxon gained 1% after Wednesday’s vote. With most of the shareholder demands focused on long-term strategy and none calling for an immediate breakup of the company, short-term gains are likely to be muted. It will take a decade or more for the oil giant to transition its sprawling global business, Stoeckle said.Woods, who retained his board seat, should be able to continue improving Exxon’s financial performance as cash flows recover, securing the S&P 500’s third-largest dividend and leaving behind 2020’s record loss. But the bigger question concerns Exxon’s energy-transition strategy, considered by many shareholders to be well behind those of its European peers.It remains to be seen how Exxon pivots, if at all, but the message from shareholders is clear: The status quo cannot continue.Exxon’s environmental record and unwillingness to embrace the pivot away from fossil fuels quickly enough was a key criticism in the proxy campaign. Engine No. 1 was scathing in its assessment of Exxon’s long-term financial performance, calling it “a decade of value destruction.”(Updates with BlackRock vote in sixth and seventh paragraphs.)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

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