PayPal (PYPL) shares slumped lower Friday after the online payments group forecast softer-than-expected holiday quarter revenues that marred a solid September quarter update.
PayPal posted a set of third quarter earnings figures that were largely ahead of Street forecasts, as revenues rose 12% to $6.85 billion, generating an adjusted bottom line of $1.08 per share, a tally that was 12 cents ahead of the consensus estimate.
Looking into the final three months of the year, however, PayPal said revenues would likely growth by 10%, a percentage point lower than its prior forecast, amid what CEO Daniel Schulman described as a "challenging macro environment, slowing e-commerce trends and an unpredictable holiday shopping season"
"We saw U.S. e-commerce growing in the low single digits in Q3 with deceleration into the close of the quarter," said acting CFO Gabs Rabinovitch. "This trend persisted in October. On our platform as well as in third-party data, we have not seen the early start to the U.S. online holiday season that we saw in 2021.
"From a market perspective, the U.S. continues to outperform international, and we are seeing weaker performance in the U.K., our second-largest market," he added. "These factors, combined with the broader macro trends, have been incorporated into our revised outlook."
PayPal shares were marked 5.2% lower in early Friday trading to change hands at $72.56 each, a move that would extend the stock's year-to-date decline to around 63%.
Spending forecasts for the holiday quarter have remained mixed, with credit card giant Visa (V) noting that "business trends have remained strong and stable" during the early weeks of its current fiscal year, and expecting "normal year-over-year growth rates in the low double digits for both business drivers."
Rival Mastercard (MA), however, said that while "consumer spending remains resilient in the face of macroeconomic headwinds and cross-border travel continues to recover", its fourth quarter outlook came in a bit below market forecasts of revenue growth in the 'low double digits' came in slightly south of Street forecasts.
