PayPal’s stock (NASDAQ:PYPL) took a hit in after-hours trading on Wednesday, despite reporting Q2 earnings that aligned with what the Wall Street analysts were expecting. While the numbers looked good on the surface, a deeper dive revealed a second consecutive quarter-over-quarter decline in active accounts, settling at 431 million as of June 30, 2023. Additionally, net cash flow went into the red, largely attributed to European “buy now, pay later” loans set to be sold off later in the year. But it wasn’t all gloomy; Q2 revenue of $7.29 billion beat expectations, and Venmo continued to process impressive volumes, reaching $67 billion for the quarter.
Looking forward, PayPal seems cautiously optimistic, projecting Q3 adjusted earnings per share between $1.22 and $1.24, either matching or outpacing the average analyst guess. For the year, the company stuck to its guns, reiterating adjusted EPS of around $4.95, and unveiled plans to repurchase about $5 billion in shares during 2023. But even these forward-looking signs of strength couldn’t overshadow the concerns that lurk beneath, notably a significant decrease in free cash flow, reflecting a rather turbulent quarter for the fintech giant.
Turning to Wall Street, analysts have a Moderate Buy consensus rating on PYPL stock based on 20 Buys, 12 Holds, and zero Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average price target of $91.11 per share implies 24.38% upside potential.
