PayPal stock ( NASDAQ:PYPL ) is going through a rough patch. The stock ( NASDAQ:PYPL ) will be down 55% in 2022, compared to a 24% drop in the S&P 500. Is now a good time to buy this fintech pioneer, taking advantage of the market’s pessimism?
A significant slowing
PayPal generated $6.8 billion in revenue in the most recent quarter (ended June 30), a 9.1% increase over the prior-year period. This compares to an increase of 18.6% in the second quarter of 2021. Furthermore, the total payment volume, a key performance indicator for PayPal stock ( NASDAQ:PYPL ) investors, increased 9% year on year to $340 billion. To be sure, that’s still a large sum, but the growth rate has slowed dramatically in recent quarters. To make matters worse, the company reported a $341 million net loss in the second quarter, its first quarterly loss since the first quarter of 2014.
The Federal Reserve’s ongoing plan to aggressively raise interest rates to tame soaring inflation is harming PayPal’s business. The purchases that dominate its platform are primarily discretionary, meaning they will be the first to be reduced if the economy deteriorates.
As a result of the softening environment, management has been forced to lower 2022 revenue guidance twice and now expects sales to rise 10% year over year. However, it raised its full-year 2022 projection for adjusted profits per share to $3.92 at the midpoint. Cost cuts of $900 million this year will undoubtedly aid in meeting the profit target.
PayPal Stock: Prospects for Growth
As a company, PayPal is still rapidly expanding. As of June 30, the firm has 429 million active accounts, increasing 6% from the previous year and 50% fr...
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