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Bear of the Day: PayPal (PYPL)

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It has been a rough year for tech stocks. The darlings of the market during the post-COVID surge, these stocks have been coming up short on earnings and revenue projections. The result, an absolute collapse. Just take a quick look at the NASDAQ Composite and you’ll see exactly what I mean. The tech-heavy index is down 23.2% year-to-date. There have been few places to hide within tech.

Today’s Bear of the Day is a stock that used to be one of the darlings in FinTech. Now, it’s come under pressure as earnings have contracted. I’m talking about PayPal (PYPL - Free Report) . PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company's payments platform allows consumers to send and receive payments in approximately 200 markets and in approximately 100 currencies, withdraw funds to their bank accounts in 56 currencies, and hold balances in their PayPal accounts in 25 currencies.

PayPal is not in the good graces of our Zacks Rank. In fact, it is currently a Zacks Rank #5 (Strong Sell). The reason is the series of negative earnings estimate revisions coming from analysts. Over the last sixty days, fifteen analysts have cut their numbers for the current year, while fourteen have followed suit for next year. The bearish moves have dropped our Zacks Consensus Estimates for the current year from $4.66 to $4.00, while next year’s number is off from $5.76 to $4.82.

One feather in the cap of long-term investors here is that there is earnings growth coming back next year. While this year’s earnings are going through a 13% contraction, next year growth returns at 20.59%. That’s on revenue growth of 11.48% this year and 16.27% next year.

The Internet – Software industry is in the Bottom 41% of our Zacks Industry Rank. There are some stocks in that industry which are Zacks Rank #1 (Strong Buy) stocks. Those include Aspen Technology (ASPN - Free Report) and Paycom Software (PAYC - Free Report) .

In-Depth Zacks Research for the Tickers Above

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Aspen Aerogels, Inc. (ASPN) - free report >>

Paycom Software, Inc. (PAYC) - free report >>

PayPal Holdings, Inc. (PYPL) - free report >>