PayPal Takes a Hit After Beating Earnings Estimates

Shares in PayPal Holdings Inc. were down in aftermarket trading on Thursday after the company released a third-quarter earnings report that included cuts to its revenue outlook.

• The shares fell more than after hours despite beat on earnings and revenue expectations for the third quarter.
• PayPal's Q4 revenue estimate of $7.38 billion was light of Wall Street's expectations.
• The company said it's working with Apple to enhance its offerings for PayPal and Venmo.

PayPal shares fell more than 5% in after-hours trading, despite beating earnings and revenue expectations for the third quarter, as the company's Q4 revenue estimate came in behind analysts' expectations.

Here's what PayPal reported:

• Earnings per share (EPS): $1.08 per share, ex-items, vs. 96 cents expected, according to a Refinitiv survey of analysts
• Revenue: $6.85 billion, vs. $6.82 billion expected, according to Refinitiv

The company estimated Q4 revenues to come in at $7.38 billion, which is less than the $7.74 billion consensus expectations, according to analysts surveyed by Refinitiv.

PayPal raised EPS guidance for the full fiscal year, saying it's benefited from "ongoing productivity initiatives." It expects to add 8 to 10 million net new active users in the fiscal year.

The company said it's working with Apple to enhance its offerings for PayPal and Venmo, including by letting U.S. merchant customers accept contactless payments through their mobile wallets and adding PayPal and Venmo network-branded credit and debit cards to the Apple Wallet.

As e-commerce boomed during the coronavirus pandemic, shares in PayPal soared. But PayPal stock has plunged from an all-time high of 310.16 on July 26, 2021.

Activist investor Elliott Management in July disclosed that it has taken a $2 billion stake in San Jose, Calif.-based PayPal. The e-commerce firm in August added $15 billion to its repurchase program of PYPL stock. PayPal bought $939 million of its own stock in the third quarter.

PayPal holds a Relative Strength Rating of only 22 out of a best-possible 99, according to IBD Stock Checkup. PYPL stock has retreated 59% in 2022.

Former parent eBay (EBAY), which spun off PayPal in 2015, has shifted its payment processing from PayPal to Netherlands-based Adyen.

November 04, 2022