The stock fell after the payments company beat second-quarter earnings guidance, but offered below-consensus guidance.
PayPal reported adjusted earnings of $ 1.15 per share, beating $ 1.13 forecast on sales of $ 6.24 billion, missing analysts’ estimates of $ 6.27 billion. PayPal also said it would earn $ 1.07 per share in the third quarter, below estimates of $ 1.14, while sales forecasts of $ 6.15 billion to $ 6.25 billion were lower than expected. $ 6.43.
“The third quarter outlook will guide the narrative, with revenue guided about 3.5% below Street Est estimates. and EPS ~ 6% below, ”writes Jefferies analyst Trevor Williams.
PayPal highlighted the impact of
the shift from to a “managed payments” system as a source of slower growth. POS growth was 40% with eBay, 48% without exit, while sales increased 32% without eBay compared to 19% with.
“We are now absorbing more pressure from eBay than we expected,” CFO John Rainey said on a call with analysts. He added that the company “expected eBay’s impact on our revenue growth to be greater than expected. The drag will rise to 8.5 percentage points of growth on third-quarter revenue, reducing $ 465 million and bringing revenue to about $ 6.2 billion.
Dan Dolev of Mizuho Securities urged investors to take a longer-term view. While it is true that the “Covid honeymoon may be over,” he wrote, referring to PayPal’s phenomenal growth in 2020, he pointed out several bright spots in the results report, including stronger engagement with PayPal’s core applications and momentum in new initiatives such as “buy now pay later”, which saw transaction volume growth of 49% quarterly.
He also points out that PayPal increased its forecast for total payment volume from 30% to 33% -35% in the third quarter, 10 points above pre-pandemic levels. “This suggests strong trends in e-commerce and PYPL’s share gains are here to stay,” he wrote in a note.
But expectations for the title can be hard to meet at this point, and there were signs of pressure that could escalate.
PayPal, for example, reported that it continues to see weakness in the “take rate” charged to merchants, referring to the payments they make to PayPal for its services. The rate fell from 2.21% in the fourth quarter of 2020 to 2.11% in the first quarter and 2.01% in the second quarter. PayPal attributed the drop to lower eBay volumes and lower exchange fees, but this may also indicate that PayPal is facing more competitive pricing pressure.
Investors don’t seem in the mood to forgive. Shares of PayPal were down 5.3% after-hours to $ 286. Expect more analysts to step in on Thursday.
Write to Ben Levisohn at [email protected]