Analysts debate whether the worst is over PayPal Stocks (PYPL) on the back of March quarter gains that met Wall Street targets and lowered 2022 guidance. PYPL stock rose on Thursday after hitting a fresh 52-week low ahead of the release of first-quarter earnings.
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After the market close on Wednesday, the e-commerce company said quarterly earnings in March came in at 88 cents a share, down 28% year-on-year. Revenue rose 7% to $6.5 billion, San Jose, Calif.-based PayPal said.
Analysts expected PayPal earnings of 88 cents per share on sales of $6.4 billion. A year earlier, PayPal was earning $1.22 per share on revenue of $6.03 billion. PayPal lowered 2022 guidance for earnings, revenue and total payments per share.
Analysts are debating whether the lowered guidelines represent a “clearing event” that could renew investor interest in the payment stocks.
“The reset was necessary to make the stock investable, but distinguishing between conservatism and fundamental pressures will be challenging in the near term,” Trevor Williams, an analyst at Jefferies, said in a note to clients.
PYPL Stock: Customer Growth Slowing
PYPL shares are up 3.2% to 85.23 in early trading today in the stock market. In Wednesday’s regular session, PYPL stock hit a fresh 52-week low.
“The sales increase in the first quarter is positive, as is — hopefully — the guidance reset,” said Dan Dolev, an analyst at Mizuho Securities, in a report. “However, given the slowdown (customer growth), disappointing Venmo stats, and questions about the future of the checkout button, we believe management needs to explain some things.”
Amid concerns about customer growth, the e-commerce company said it added 2.5 million consumer accounts in the first quarter, bringing its total to 429 million.
In the March quarter, total payment volume processed by merchant customers grew 13% to $323 billion, in line with estimates. Analysts had forecast a total payment volume of 322.6 billion US dollars.
PayPal stocks have a Relative Strength Rating of just 4 out of 99 best, according to the IBD Stock Checkup.
For 2022, PayPal is forecasting revenue growth in a range of 11% to 13% versus previous forecasts of 15% to 17% growth.
PayPal stock plummets in 2022
“Despite a generally good first quarter, PayPal sees a more dovish outlook for e-commerce overall, a decline in cross-border TPV, macro pressures and upcoming spending,” James Friedman, an analyst at Susquehanna, said in a report. “But with the network’s disclosures already showing a slowdown in e-commerce, these headwinds may already be priced into shares.”
Meanwhile, PayPal stock was down about 55% in 2022. Shares plunged in February after 2022 guidance missed estimates and the company abandoned five-year financial targets.
Also, Chief Financial Officer John Rainey plans to exit the online payments site for the retail giant Walmart (WMT).
Former Parent eBay (EBAY), which spun off PayPal in 2015, is almost done moving its payment processing from PayPal to Netherlands-based Adyen.
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Follow Reinhard Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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