2023-05-26 08:11:00 ET
Fintech leader PayPal (NASDAQ: PYPL) delivered a solid earnings report on May 9 for the first quarter (ended March 31), with revenue and earnings surpassing consensus estimates. The company is also guiding for adjusted earnings per share (EPS) of $4.95 for fiscal 2023, implying a year-over-year upside of 20%, higher than the prior growth outlook of around 18%.
Yet, shares of the payment network specialist are down by over 40% from its 52-week highs. Wall Street is mainly concerned about the slow pace of year-over-year expansion in adjusted operating margins (100 basis points expected, as compared to the previous estimate of 125 basis points) and a 2 million sequential decline in the number of active accounts in the first quarter. The stock is pressured by a slowdown in the higher-margin branded checkout business (its legacy business that enables merchants to process transactions through PayPal's payment network and includes PayPal's checkout button), intensifying competition from other digital wallets , and currency fluctuations.
However, despite the headwinds, the company's long-term growth story remains intact. With shares trading at multi-year low price levels, patient investors stand to reap huge financial rewards in the long run.
For further details see:
PayPal Stock: Should You Buy the Current Dip?