Digital payment pioneer PayPal Holdings Inc. (PYPL - Free Report) suffered a massive one-day selloff following its fourth quarter fiscal 2021 financial release on February 1. PYPL stock tumbled roughly 25% on the back of slowing user expansion and other setbacks.
PayPal’s Story
PayPal is a digital and mobile payment giant that officially spun off from eBay in 2015. The company has grown for years amid a broader shift to online payments and e-commerce expansion. PayPal also benefitted from the booming peer-to-peer payment world, where its Venmo app challenges fintech rivals such as Block’s (formally Square) Cash App and traditional financial powers like JPMorgan.
PayPal boasts that its platform is “empower more than 425 million consumers and merchants in more than 200 markets to join and thrive in the global economy.” The company’s Q4 revenue climbed 13% and its FY21 sales surged 18% to $25.4 billion, with its total payment volume up 33% to $1.25 trillion.
PayPal’s growth came on top of 21% revenue expansion in 2020, as it gained more users amid lockdowns. Unfortunately, PayPal is struggling to turn some of those people into recurring users. Wall Street also got spooked after PayPal abandoned its user growth target. “We no longer believe that the 750 million medium-term account aspiration we set last year is appropriate,” CFO John Rainey said on its earnings call.
The company is now focused more on trying to get regular PayPal customers to use its services more often. Plus, PayPal has been negatively impacted by economic uncertainty, from “supply chain challenges, as well as a pullback in spending by lower-income consumers” and beyond.
Bottom Line
PayPal is still expected to growth its revenue by 16% in 2022 and 20% in 2023, with its adjusted earnings projected to climb by 3% and 23%, respectively. That said, its FY22 consensus EPS estimate is down 8% from where it was, with FY23 11% lower. PYPL’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment.
PYPL stock fell another 3.7% during regular hours Monday. The drop is part of a steady decline off PayPal’s summer 2021 highs that has it trading around where it was before the initial covid selloff.
PayPal still offers long-term potential and Wall Street will likely start to scoop up the stock sooner or later. Yet, some investors might want to stay away from PYPL until it begins to show some signs of life again.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Digital payment pioneer PayPal Holdings Inc. (PYPL - Free Report) suffered a massive one-day selloff following its fourth quarter fiscal 2021 financial release on February 1. PYPL stock tumbled roughly 25% on the back of slowing user expansion and other setbacks.
PayPal’s Story
PayPal is a digital and mobile payment giant that officially spun off from eBay in 2015. The company has grown for years amid a broader shift to online payments and e-commerce expansion. PayPal also benefitted from the booming peer-to-peer payment world, where its Venmo app challenges fintech rivals such as Block’s (formally Square) Cash App and traditional financial powers like JPMorgan.
PayPal boasts that its platform is “empower more than 425 million consumers and merchants in more than 200 markets to join and thrive in the global economy.” The company’s Q4 revenue climbed 13% and its FY21 sales surged 18% to $25.4 billion, with its total payment volume up 33% to $1.25 trillion.
PayPal’s growth came on top of 21% revenue expansion in 2020, as it gained more users amid lockdowns. Unfortunately, PayPal is struggling to turn some of those people into recurring users. Wall Street also got spooked after PayPal abandoned its user growth target. “We no longer believe that the 750 million medium-term account aspiration we set last year is appropriate,” CFO John Rainey said on its earnings call.
The company is now focused more on trying to get regular PayPal customers to use its services more often. Plus, PayPal has been negatively impacted by economic uncertainty, from “supply chain challenges, as well as a pullback in spending by lower-income consumers” and beyond.
Bottom Line
PayPal is still expected to growth its revenue by 16% in 2022 and 20% in 2023, with its adjusted earnings projected to climb by 3% and 23%, respectively. That said, its FY22 consensus EPS estimate is down 8% from where it was, with FY23 11% lower. PYPL’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) at the moment.
PYPL stock fell another 3.7% during regular hours Monday. The drop is part of a steady decline off PayPal’s summer 2021 highs that has it trading around where it was before the initial covid selloff.
PayPal still offers long-term potential and Wall Street will likely start to scoop up the stock sooner or later. Yet, some investors might want to stay away from PYPL until it begins to show some signs of life again.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Get the latest research report on PYPL - FREE