Paypal Sinks 18% on Disappointing 2022 Guidance

Shares of digital payment solutions provider Paypal Holdings, Inc. (NASDAQ: PYPL) plunged almost 18% in after-hours trading on Tuesday after the company’s fourth-quarter earnings and 2022 guidance fell short of expectations.

Adjusted EPS grew 4% year-over-year to $1.11, just missing the Street’s estimate of $1.12.

Revenue increased 13% year-over-year to $6.92 billion, coming in marginally above analysts’ expectations of $6.86 billion.

Paypal added 9.8 million Net New Active Accounts (NNAs) during the quarter, which include 3.2 million accounts that came with the acquisition of Paidy.

Payment transactions rose 21% to 5.3 billion, and Total Payment Volume (TPV) jumped 23% to $339.5 billion.

The company ended the quarter with cash, cash equivalents, and investments of $16.3 billion.

Guidance

For the first quarter of 2022, Paypal expects revenue to grow around 6% and adjusted EPS to stand at nearly $0.87, compared to the consensus estimate of $6.74 billion and $1.16, respectively.

The company anticipates adjusted EPS to range from $4.60 to $4.75 in full-year 2022, and revenue to rise 15% to 17%. Analysts expect the company to report revenue of $29.88 billion and EPS of $5.25.

About Paypal

Headquartered in California, Paypal allows its customers to send and receive payments digitally. Its solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, iZettle and Hyperwallet.

Paypal stock closed 2.2% up on Tuesday before the company released the earnings.

Wall Street’s Take

Following the results, Mizuho Securities analyst Dan Dolev reiterated a Buy rating on the stock with a price target of $200 (13.8% upside potential).

Dolev said, “Following the COVID sugar rush, 4Q marks a return to earth for PYPL with a disappointing FY22 guide. On balance, despite the understandable knee-jerk negative reaction, we see signs of the COVID hangover coming to an end, opening a new investment opportunity in PYPL.”

Overall, the stock has a Strong Buy consensus rating based on 27 Buys, 6 Holds and 1 Sell. The average Paypal Holdings price target of $248.34 implies 41.3% upside potential. Shares have lost 39.4% over the past six months.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (NYSE: SEMR), the world’s biggest website usage monitoring service, offers insight into Paypal’s performance.

According to the tool, compared to the previous year, Paypal’s website traffic registered a 1% decline in global visits in December. However, the website traffic has increased 4% year-to-date against the same period last year.

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