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PayPal shares fall after company blames inflation for poor direction


Shares of PayPal fell more than 19% in pre-market trading on Wednesday, a day after the company provide weak instructions which it partly blamed on inflation.

PayPal reported mixed results for the fourth quarter, where the earnings per share shortfall was estimated at $1.11, old-than-expected entries of $1.12. However, it beat revenue estimates, reporting $6.92 billion versus $6.87 billion expected, according to Refinitiv.

But it also said it expected first-quarter non-GAAP earnings per share of 87 cents, while analysts had expected $1.16. It also predicts that sales will grow about 15% to 17% for the whole of 2022, on a spot and foreign-currency-neutral basis. Analysts expect annual revenue growth of 17.9% in 2022.

PayPal logo displayed on smartphone.

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In an interview with CNBC, PayPal CEO Dan Schulman said the company has taken “a measured approach” to the guidance, but expects revenue to accelerate in the second half of the year. .

He pointed to challenges including converting the former owner eBay to its own payments platform, and “exogenous factors” such as inflation dampening consumer spending and supply chain problems “disproportionately impact” cross-border payments.

PayPal also missed its user growth target in part because 4.5 million “illegal” accounts joined the platform, which “affected our ability to meet our guidance for the quarter,” CFO John Rainey said. The company also stepped back from user growth goals, which Rainey called “choice” to focus on “sustainable growth and driving engagement.”

Canaccord Genuity Capital Markets analysts, who maintain a buy rating on the stock but have lowered their price target from $315 to $215, wrote in a note Tuesday that PayPal’s challenges primarily Weaknesses are “short-term difficulties.”

Canaccord notes: “While net new account growth is expected to moderate in 2022, we are seeing a steady increase in user engagement and expect to see more marketing behind driving engagement in 2022.” And PYPL has shown that it remains nimble despite its size in exploiting rapidly growing opportunities: scaling up its impressive Buy Now Postpaid (BNPL) offering and launching stock trading.”

Analysts expressed optimism about the Venmo . Partnership with Amazonwhich they expect “could be the biggest single catalyst for PYPL by 2022.”

BTIG analysts, who downgraded the stock to neutral and removed their $270 price target, said in a note Tuesday that PayPal is now a “‘story for me’ see”. They cite new areas of “uncertainty” including “a significant change in the company’s approach to customer acquisition and engagement.” They also point to the director’s statement. executives that the full-year forecast is cautious in part due to inflation and supply chain issues, which analysts say “offers a stark contrast to the more upbeat annual outlook presented.” out recently by the card network.”

Kate Rooney of -CNBC contributed to this report.

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WATCH: PayPal CEO says company will take a measured approach to guidance by 2022



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