2021-11-09 09:15:00
PayPal Holdings (PYPL) reported mixed third-quarter financial results as earnings topped views, but revenue and total payment volume missed estimates. PayPal stock tumbled as its fiscal 2022 revenue outlook came in light.
San Jose, Calif.-based PayPal reported earnings late Monday. PYPL stock tumbled 12.1% to 201.60 in morning trading on the stock market today. That’s the lowest in nearly a year.
Management said it expects fiscal 2022 revenue growth in the high teens, about 18% year-over-year, for PYPL stock. The revenue guidance, which includes the acquisition of Paidy in Japan, was below expectations of 22% growth.
PayPal announced a new Venmo-related payments deal with Amazon.com (AMZN). Venmo is PayPal’s person-to-person payment service.
PYPL Stock: Amazon Deal A Bright Spot
Venmo has expanded into new areas as PayPal aims to grow revenue from its user base.
UBS analyst Olivia Nesnay likes the Amazon deal. “While missing Street expectations, PayPal announced a large, unexpected win with Amazon,” Nesnay said in a report. “Starting in 2022, Pay with Venmo can be used by customers to make purchases on Amazon. We believe this win solidifies PayPal’s competitive advantage as the largest two-sided payments network, while also calming fears of disintermediation by Amazon Pay.”
PayPal earnings for the quarter ended Sept. 30 came in at $1.11 per share, up 4% from a year earlier. The company said revenue rose 13% to $6.18 billion, including the acquisition of Honey Science.
Analysts expected PayPal earnings of $1.07 a share on revenue of $6.23 billion. A year earlier, PayPal earned $1.07 a share on sales of $5.46 billion.
PayPal Stock: Payment Volume Light
“PYPL attributed softness to lower back to school spending, weaker travel demand due to the Delta variant, supply chain issues, and incremental eBay headwinds,” said Deutsche Bank analyst Bryan Keane in a report.
Total payment volume processed from merchant customers climbed 26% to $310 billion. Analysts had projected total payment volume of $312.7 billion.
PayPal said it added 13.3 million net new active accounts worldwide in the September quarter. The digital payment company had 416 million active accounts worldwide as of Sept. 30.
For the current quarter ending in December, PayPal forecast earnings per share of $1.12, up 4% from a year earlier, below estimates of $1.27.
PayPal stock has pulled back about 22% from an all-time high of 310.16 on July 26. Worries over a big acquisition have pressured the stock.
On the earnings call, “management attempted to allay investors’ concerns about Pinterest (PINS) (or another large deal), characterizing large-scale M&A as ‘not a likely event,’ said Lisa Ellis, analyst at MoffetNathanson in a report.
Low Relative Strength Rating
PayPal stock holds a Relative Strength Rating of only 15 out of a best-possible 99, according to IBD Stock Checkup.
Former parent eBay (EBAY), which spun off PayPal in 2015, is shifting its payment processing from PayPal to Netherlands-based Adyen. EBay accounted for 4% of PayPal revenue in Q3, down from 13% in the year-earlier quarter, said Barclays analyst Ramsey El-Assal in a report.
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines.
IBD offers a broad range of growth stock lists, such as Leaderboard. Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.