Since early May, PayPal (NASDAQ:PYPL) has been on a bull run, with the shares jumping from $72 to $91. But on the news of the second-quarter earnings report, it looks like Wall Street baked in much of the good news. So far in early trading, PYPL stock is off about 3.5%.

Yet the earnings report was still solid. Revenues increased by 32% to $3.86 billion, compared to the consensus estimate of $3.81 billion. As for the profits, they came to 58-cents-per-share, which beat estimates by a penny.

But the outlook was another matter. It was mostly a mixed bag, which is likely the reason for the weakness in PYPL stock. For the third-quarter, the company forecasts adjusted earnings to range from 53 to 55-cents-per-share with revenues of $3.62 billion and $3.67 billion. The analysts were looking for 54 cents and revenues of $3.71 billion.

One of the nagging issues for PYPL stock is the ending of the strategic relationship with eBay (NASDAQ:EBAY), which was announced earlier in the year. As a result, to make up for the slack, the company has been ramping up dealmaking.

Here’s a look at some of the notable events for the quarter:

• PayPal agreed to shell out $2.2 billion for iZettle, which is a top business commerce platform in Europe and Latin America. The company has about half a million merchants and is expected to generate $165 million in gross revenues for this year. The deal is likely to provide a boost for taking on Square (NYSE:SQ).
• PayPal announced a deal to purchase Hyperwallet for $400 million in cash. The company operates a global payout system, such as for e-commerce platforms and marketplaces. There is distribution in over 200 markets for prepaid cards, bank accounts, debit cards, cash pickup, checks and PayPal transactions.
• PayPal struck a deal to acquire Simility for $120 million. The company develops technologies for fraud prevention and risk management.
• PayPal entered a deal to sell consumer credit receivables to Synchrony (NYSE:SYF). The purchase amount was $6.9 billion. The companies also extended their co-brand credit card program agreement.

PYPL Stock and the Growth Drivers

The quarter showed that PayPal’s core metrics continue to ramp at a nice pace. The new active accounts rose by 18% to 7.7 million and the payment transactions volume jumped by 28% to 2.3 billion. There were 35.7 payment transactions per active account on a trailing 12 months basis, for an increase of 9%.

As should be no surprise, Venmo pulled off another standout quarter. Volume spiked by a sizzling 78% to $14 billion. The app is the must-have for millennials — and PayPal is in the early stages of monetization. In other words, Venmo is likely to be a long-term driver for PYPL stock.

Bottom Line on PYPL Stock

Besides the eBay situation, PYPL stock faces other issues. Perhaps the biggest is the competitive environment. The company must fight against big players like Apple (NASDAQ:AAPL) as well as smaller operators like Square. What’s more, even traditional banks are getting traction with mobile payments.

Yet the market opportunity is still massive and there is a secular change in financial services, as people increasingly use their smartphones for making payments. It also helps that PayPal has a trusted brand, strong technologies and a massive user base.

Now it’s true that the valuation is not cheap, with the forward price-to-earnings ratio at 32. But then again, given the company’s advantages, it is reasonable for the shares to have a premium.

Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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