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PayPal (NASDAQ: $PYPL) Reports Robust Earnings, Experiences an 11% Stock Decline 

PayPal Holdings, Inc. (NASDAQ: $PYPL)

PayPal (NASDAQ: $PYPL) is a multinational fintech company based in San Jose, CA that has been a pioneer in the digital commerce space for over 25 years. The company has always been on the cutting edge of digital payment technology; making it easier, affordable, and secure to shop, send, and receive money globally. 

PayPal Posts Robust Q4 Results

On February 7, PayPal reported better-than-expected fourth-quarter and full-year results. The company beat Wall Street estimates for earnings and revenue, driven by solid growth in total payment volume and transactions.

PayPal reported Q4 adjusted earnings per share of $1.48, up 19% year-over-year and exceeding analysts’ consensus estimate of $1.40, while GAAP EPS increased by 61% to $1.29. Total revenue grew 9% to $8 billion, surpassing expectations of $7.8 billion.  

PayPal President and CEO Alex Chriss said, “I’m pleased with our better-than-expected fourth-quarter results, which are a testament to the incredible work of the PayPal team and their strong commitment to delivering more value to our customers each day.“  

PayPal’s performance in the fourth quarter showed some positive trends; total payment volume (TPV) went up by 15% to $409.8 billion in the quarter, and FY23 TPV rose 13% to $1.53 trillion. Payment transactions increased 13% in the quarter to $6.8 billion, while full-year payment transactions rose 12% to $25 billion.  

In the fourth quarter, the GAAP operating margin grew by 468 basis points to 21.5%, and the non-GAAP operating margin grew 39 basis points to 23.3%, reflecting improved efficiency and profitability of PayPal’s operations.  

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PayPal’s Resilience and Growth in 2023 

For the full year 2023, PayPal generated record revenues of $29.8 billion, up 8% year-over-year or 9% on a foreign currency-neutral basis.  

Full-year GAAP earnings per share jumped 84% to $3.84, while non-GAAP EPS climbed 24% to $5.10. The company’s operating margin expanded 110 basis points to 22.4% on a non-GAAP basis. 

PayPal generated $4.8 billion in cash flow from operations and $4.2 billion in free cash flow for the year. The company returned $5 billion to shareholders through stock repurchases, including $600 million in Q4. 

The record financial performance in 2023 demonstrates the strength of the PayPal platform. In a challenging macro environment, they delivered double-digit volume growth, expanded margins, and returned significant capital to shareholders.  

2024 Outlook and Strategy 

Buoyed by its strong Q4 results, PayPal issued upbeat guidance for the first quarter and full year 2024. For Q1, the company forecasts revenue growth of 6.5% to 7%, or 7%-7.5%, on an FX-neutral basis.  

For 2023, PayPal expects GAAP EPS of around $3.60, while the non-GAAP EPS is projected to align with the 2023 figure, remaining at $5.10. 

The company enters 2024 with good momentum across business and a clear set of priorities to drive sustainable and profitable growth; Chriss said, “We’ve added key talent to our leadership team, accelerated our innovation velocity and impact, and taken action to realize cost savings that we’re reinvesting in our most important initiatives. 2024 is a year focused on execution to position PayPal for long-term success.”  

PYPL Stock Declines  

PayPal’s stock took a hit after the company announced its latest financial results. Shares dropped 0.74% from the previous day’s closing price of $63.71 on Wednesday. The stock continued falling this morning, and as of 11:45 AM Thursday, February 8, 2024, the shares were down a steep +11% compared to the prior day’s close of $63.24. At close of trading, the stock was down 11.24% at $56.13 per share.

With the stock currently trading around $56, PYPL is well below its 52-week high of $82.85 per share. It is also trading lower than its 50-day moving average of $61.08 and its 200-day average of $62.48. Overall, the stock has taken a major hit over the past year, down 19.36% over the last 12 months. 

PYPL Stock

PayPal’s Growth Prospects: Analyst Perspectives 

While PayPal’s stock has faced challenges recently, new developments position the company for future growth. PayPal just announced a partnership with Paxos and Chainlink. The deal will see PayPal USD integrated into blockchain networks, boosting the adoption of their digital dollar. 
 
Wall Street analysts remain generally bullish on the stock over the next 12 months. Out of 25 analysts, 12 recommend buying the stock, while 13 suggest holding it. The average 12-month price target represents a potential upside of 23.44% from the current $56.09 share price. 

Is PayPal A Buy?  

With PayPal’s strong platform, new partnerships, and analyst optimism, the company appears poised to bounce back from its recent stock slump. While macro conditions remain uncertain, PayPal’s innovative capabilities and leadership in digital payments make it a compelling long-term investment. 

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