December 5, 2022

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PayPal stock rises as analysts consider 2022 directive cut as 'clearing event'

PayPal stock rises as analysts consider 2022 directive cut as ‘clearing event’

Analysts debate whether the worst is over PayPal Collectibles (PYPL) on the heels of March quarter earnings that hit Wall Street targets and cut 2022 guidance. PYPL stock soared Thursday after hitting a 52-week low before first-quarter earnings were announced.




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After the market closed on Wednesday, the e-commerce company said earnings for the March quarter were 88 cents a share, down 28% from a year earlier. PayPal in San Jose, California, said revenue rose 7% to $6.5 billion.

Analysts expected PayPal earnings of 88 cents per share on revenue of $6.4 billion. A year ago, PayPal earned $1.22 per share on sales of $6.03 billion. PayPal has lowered its 2022 guidance on earnings per share, revenue and total payment volume.

Analysts debate whether the discounted guidance points to a “clearing event” that could renew investor interest in repaying stocks.

“The reset was necessary to make the stock investable, but distinguishing between conservatism and fundamental pressure will be a challenge in the near term,” Jefferies analyst Trevor Williams said in a note to clients.

PayPal Customer Growth Slows

PYPL stock rose 4.6% to 86.44 in morning trading on stock market today. On Wednesday’s regular session, PYPL stock hit a 52-week low.

“The first-quarter revenue outperform is positive, we hope — guidance resets,” said Dan Dolev, an analyst at Mizuho Securities in his note to clients. “However, with (customer growth) slowing and Venmo’s disappointing stats and questions regarding the future of the exit button, we think management has some explanation to do.”

Amid concerns about customer growth, the e-commerce company said it has added 2.5 million consumer accounts. This brings their total to 429 million.

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In the March quarter, total volume of payments processed from merchant customers increased 13% to $323 billion, in line with estimates. Analysts had expected total payments of $322.6 billion.

according to IBD stock check.

For 2022, PayPal Expected revenue growth In the 11% to 13% range versus the previous guidance of 15% to 17% growth.

PayPal Stock Falling in 2022

“Despite an overall good first quarter, PayPal sees a generally milder outlook for e-commerce, declining (total payment volume) across borders, and macro and expense pressures continuing,” Susquehanna analyst James Friedman said in a note. “But with network revelations already showing a slowdown in e-commerce, these headwinds may already have been priced in stocks.”

Meanwhile, PayPal’s stock is down about 55% in 2022. The shares tumbled in February after its 2022 guidance missed estimates and the company ditched its five-year financial goals.

“PYPL now expects mid-adolescent growth in the second half of 2022,” Bank of America analyst Jason Kupferberg said in a note. “Some might interpret this as a good proxy for growth after 2022. But in our view, the view around the strength of natural earnings remains limited, while uncertainty surrounds the strategic pivot of PYPL that favors engagement (in core repayment and new digital wallet) over net New additions.”

Also, CFO John Rainey plans to leave the online payment site of the retail giant Walmart (WMT).

ex-parent ebay (ebay), which split from PayPal in 2015, is about to finish transferring payment processing from PayPal to Adyen in the Netherlands.

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