Shares in PayPal Holdings tumbled Thursday after the company reported December-quarter earnings that topped estimates while total payment volume for PYPL stock edged by views amid market share loss to Apple.
The digital payments firm reported fourth quarter earnings after the market close on Wednesday. On the stock market today, PYPL stock fell 9.1% to 57.50 in early trading.
At least five Wall Street firms cut price targets for PYPL stock on Thursday, including Evercore ISI, Citigroup, Goldman Sachs, JPMorgan and Baird.
"On one hand, the outlooks for gross profit and EPS should provide a floor for 2024 estimates, a prudent move," said Jefferies analyst Trevor Williams in a report. "On the other, there is risk in committing to invest heavily behind efforts to fix problems — namely, branded checkout market share — that may be, we believe, irreparable."
PayPal did not offer 2024 revenue guidance. The company didn't offer 2023 revenue guidance a year earlier. But the digital payments company provided annual revenue guidance in better times.
At Evercore ISI, analyst David Togut said in a report: "PayPal continues to confront the twin challenges of market share and customers loss in its branded wallet business and negative mix shift toward its high growth, low-take-rate payments platform, Braintree."
PayPal earnings for the fourth quarter rose 19% to $1.48 per share on an adjusted basis. Revenue climbed 9% to $8 billion.
Analysts expected PayPal earnings of $1.36 a share on revenue of $7.88 billion. A year earlier, PayPal earned $1.24 a share on sales of $7.38 billion.
How Will Job Cuts Affect PYPL Stock
Total payment volume processed from merchant customers in the quarter climbed 15% to $409.8 billion. Analysts had projected total payment volume of $405.5 billion.
For full-year 2024, PayPal predicted adjusted earnings of $5.10, missing estimates amid higher investments. Analysts had called for earnings of $5.51 a share.
New CEO Alex Chriss took the helm in late September. Also, PayPal named a new chief financial officer: Jamie Miller, formerly CFO at consultancy EY.
At RBC Capital, analyst Daniel Perlman said in a report: "The new CEO and CFO delivered a clear message 'this is a transition year,' which will require fast execution, reinvestment of cost savings and a strong focus on branded checkout and unbranded (Braintree) product innovation."
PayPal said its profit outlook included "adjustments of approximately $1.8 billion, including estimated stock-based compensation expense and related payroll taxes of approximately $1.4 billion and an estimated restructuring charge of approximately $120 million."
Meanwhile, PayPal plans to cut 9% of its workforce, or 2,500 employees, in 2024.
San Jose, Calif.-based PayPal has evolved from an online checkout site to a mobile shopping and person-to-person payments site. Meanwhile, competition has heated up with Apple, Square-parent Block and others.
Heading into the PayPal earnings report, shares were up 4% in 2024 but down 23% over the past year.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
