PayPal
Despite this recent pop, the stock has been a massive underperformer with a 48% loss YTD. Even during this recent bear market rally, it's underperformed the market and other tech stocks along with many fintech companies.
In fact, the stock is now under its March 2020 level as many of the post-pandemic trends fueling its ascent have reversed such as trading volumes in crypto, e-commerce spending, and digital payments. The market environment has also soured due to rising rates and more caution among investors in terms of making bullish projections about PayPal's ability to maintain growth and increase margins.
Inside the Numbers
PayPal shares rose as much as 13% in extended trading on Tuesday after the financial services firm issued stronger-than-expected second-quarter results. During its earnings presentation, PayPal said it had entered into an information-sharing agreement on value creation with Elliott Management.
In Q2, PayPal reported earnings per share of $0.93 which topped expectations of $0.86 per share. Revenue increased by 9% and edged out analysts' estimates at $6.81 billion vs. $6.79 billion.
PayPal had a total of 429 million active accounts at the end of the quarter, a 6% increase from last year but below estimates of 432.8 million. In Q2, it added 400,000 new active accounts, which is a deceleration from 2.4 million new net accounts in the previous quarter. It continues to see a total of 10 million new accounts between PayPal and Venmo.
It's also made strides in terms of increasing cash flow as it cut costs by $900 million this year which should result in $1.3 billion saved in 2023. It's also curbing some growth initiatives like offering stock trading and instead focusing on the increasing use of payments in stores. It's also looking to build synergies with Venmo.
For the full year, PayPal is forecasting $3.87 to $3.97 in adjusted earnings per share, a slight increase from its previous range of $3.81 to $3.93 per share.
