Analysts are debating whether the worst is over PayPal holdings (PYPL) on the back of March quarter earnings which hit Wall Street targets and lowered 2022 indications. PYPL shares rallied on Thursday after hitting a new 52-week low before the first earnings release. quarter.
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After the market closed on Wednesday, the e-commerce company said earnings for the March quarter were 88 cents per share, down 28% from the previous year. Revenue increased 7% to $ 6.5 billion, San Jose, California-based PayPal said.
Analysts had expected PayPal earnings of 88 cents per share on revenue of $ 6.4 billion. A year earlier, PayPal earned $ 1.22 per share on sales of $ 6.03 billion. PayPal lowered its 2022 guidelines on earnings per share, revenue and total payment volume.
Analysts are debating whether reduced driving signs a “clearing event” that could renew investor interest in the payment stock.
“The reinstatement was necessary to make the stock investable, but distinguishing between conservatism and fundamental pressure will be a challenge in the short term,” Jefferies analyst Trevor Williams said in a note to clients.
Slow growth of PayPal customers
PYPL shares were up 4.6% to 86.44 in morning trading on today’s stock market. In Wednesday’s regular session, PYPL shares hit a new low of 52 weeks.
“The first quarter revenue pulse is positive, as is – hopefully – the restoration of guidance,” Mizuho Securities analyst Dan Dolev said in his note to clients. “However, with the slowdown (customer growth), disappointing Venmo statistics, and questions about the future of the checkout button, we think management has some explanations.”
Amid concerns over customer growth, the ecommerce company said it added 2.5 million consumer accounts. This brought his total to 429 million.
In the March quarter, the total volume of payments processed by merchant customers increased 13% to $ 323 billion, in line with estimates. Analysts had forecast a total payment volume of $ 322.6 billion.
PayPal shares have a relative strength score of only 4 out of 99, according to IBD Stock Checkup.
For 2022, PayPal expects revenue growth of between 11% and 13% compared to the previous growth forecast of 15% to 17%.
PayPal shares plummet in 2022
“Despite a generally good first quarter, PayPal sees a more moderate overall outlook for e-commerce, declining cross-border (total payment volume), macro pressures and oncoming spending,” the analyst said in a statement. by Susquehanna James Friedman. “But with network revelations already showing an e-commerce slowdown, these headwinds may already have been priced into stocks.”
Meanwhile, PayPal shares had retreated about 55% in 2022. The shares plummeted in February after the 2022 guidance missed estimates and the company abandoned its five-year financial targets.
“The PYPL now expects mid-teens revs growth in the second half of 2022,” Bank of America analyst Jason Kupferberg said in a statement. “Some may interpret this as a good proxy for post-2022 growth. But from our perspective, visibility into the power of normalized earnings remains limited, while uncertainty hovers over the PYPL’s strategic pivot which favors commitment (in cash principal and in the new digital portfolio) compared to the new net additions. “
Additionally, Chief Financial Officer John Rainey plans to leave the online payment site for the retail giant walmart (WMT).
Former parent eBay (EBAY), which spun off PayPal in 2015, has almost finished moving payment processing from PayPal to Adyen, based in the Netherlands.
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