Major Catalysts for the PaYPaL Weekly
downgraded PayPal last Wednesday, citing worsening e-commerce trends as
shoppers return to bricks-and-mortar stores; warning that PayPal faces a
"muted" setup for the year ahead.
Trevor Williams changed his rating to Hold, down from Buy, and lowered his
price target to $200 from $255.
Daniel Perlin remains in the digital payments giant’s corner, the analyst
thinks the company’s outlook necessitates a revision to his PayPal model. “We have better incorporated into our model
management’s commentary around the difficult comps expected in FY22, given reserve
releases in FY21, which should return to more normalized patterns in FY22,”
the analyst explained.
Perlin reduced his FY22 adj. EPS estimate from $5.42 to $5.07 and lowered the
adj. EBITDA forecast from $8.42 billion to $7.95 billion.
share price decline is by no means unique in the payment space; most of its
peers have seen “material multiple contraction,” while many growth stocks’
valuation have been hammered amidst the heightened fears of inflation and
rising interest rates.
alongside the reduced FY22 estimates, there is also a price target cut for the
stock. The figure drops to $230 from $298.
According to the issued ratings of
42 analysts in the last year, the consensus rating for PayPal stock is Buy
based on the current 1 sell rating, 9 hold ratings and 32 buy ratings for PYPL.
The average twelve-month price target for PayPal is $269.92 with a high price
target of $350.00 and a low price target of $190.00.
Last Earnings Call.....
company's third-quarter 2021 earnings call, management provided sales guidance
of $30 billion for 2022 that disappointed Wall Street. In October, the stock
started trending down after rumors swirled that PayPal was in talks to acquire
social media platform Pinterest in a possible $45-billion
deal. PayPal came out and said that it was not pursuing a
purchase of Pinterest.
estimated to report earnings on February 02, 2022. Analysts expect Paypal to
post earnings of $1.12 per share. This would mark year-over-year growth of
3.7%. The reported EPS for the same
quarter last year was $0.75.
After PayPal lowered expectations last quarter, Deutsche Bank’s Bryan
Keane expects the digital payments giant to deliver “steady growth.”
Boosted by ~24% year-over-year TPV growth, the analyst anticipates PYPL
will generate revenue growth of ~12.9% and EPS of $1.12.
That said, Keane does not foresee any unexpected fireworks. “Given the latest quarterly trends in eComm,
continued supply-chain issues, delta/omicron, and eBay headwinds, we see
relatively limited upside again this quarter,” said the analyst.
Looking at PayPal’s monthly users trends, Keane’s expected results appear
in the same ballpark as the quarter’s action. Unique Visitors (UVs) rose by 14%
sequentially from 676.8 million to 769 million and came in 11% above the figure
reported during the same period last year.
Looking ahead to 1Q22, similar to 4Q21, given the “more difficult comps”
yet offset by “moderating eBay headwinds,” Keane thinks PayPal will
“potentially” guide to cc revenue growth of ~12-14%.
Effect of Pandemic.....
payments certainly received a boost in 2020, but with the return of in-person
shopping, PayPal is having problems getting back on track and produce the
market-beating returns that investors expect of it.
If we take a
step back and focus on the bigger picture, there's a lot to like about this
business. As of Sept. 30, PayPal counted 416 million active accounts, up 15%
year over year. The company processed $310 billion in TPV during the
three-month period, which is an astronomical amount. The secular shift toward
electronic payments is a real and sustainable trend,
and PayPal is at the forefront.
Schulman one day hopes the company will have 1 billion active users,
a feat that would entail people viewing PayPal as a one-stop financial shop.
New upgrades to the flagship app, like bill pay, early direct deposit,
shopping deals and rewards, and a savings account, make it more appealing.
not to believe that PayPal's stock, now trading at a nearly two-year-low
price-to-earnings ratio of 46, will bounce back nicely in 2022. The business
has a massive (and growing) customer base and is introducing new features to
drive engagement, all of which should support healthy revenue and profit
increases for the current year and beyond.
users who've allegedly had their accounts frozen and funds taken by the company
without explanation have filed a federal lawsuit against the online payment
service. The plaintiffs — two users from California and one from Chicago — are
accusing the company of unlawfully seizing their personal property and
violating racketeering laws. They're now proposing a class-action lawsuit on
behalf of all other users who've had their accounts frozen before and are
seeking restitution, as well as punitive and exemplary damages.
long angered many a user for limiting accounts and freezing their funds for six
months or more. One high-profile case was American poker player Chris
Moneymaker's who had $12,000 taken from his account after six months of being
limited. Moneymaker was already in the process of asking people to join him in
a class action lawsuit before his funds were "mysteriously returned."
finance and digital upstarts alike claim the other side has an unfair
Jamie Dimon’s 66-page letter to JPMorgan Chase & Co. shareholders last year
lies a chart: 11 ways being a bank is costlier than being a fintech, from
deposit insurance to higher capital and liquidity requirements. The longtime
chief executive officer tallied tens of billions of dollars that he says such
rules cost the bank over the past decade.
for years griped about what he calls an unfair playing field. He isn’t alone:
Big banks and the powerful lobbying groups representing them are readying a
fight on multiple fronts, in what’s already shaping up as a definitive year for
the rivalry between traditional banks and their tech competition.
bracing for tougher regulation from the Biden administration, but they hope
stricter rules will apply to fintech as well.