PayPal slides on weak guidance: ‘numbers were decent excluding eBay’

PayPal Holdings Inc (NASDAQ: PYPL) on Monday said its revenue came in shy of Wall Street estimates in the fiscal third quarter.

After an initial jump in the share price on better-than-expected earnings, the stock ended up about 5.0% lower than where it closed the regular session on weak guidance.

Highlights from Moshe Katri’s interview on CNBC’s ‘Closing Bell’

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On CNBC’s “Closing Bell”, Wedbush Securities’ Moshe Katri agreed this earnings season was “traumatic” for the fintech and payments companies but said “PayPal’s numbers were decent, excluding eBay”.

Fintech and payments firms have had muted numbers and guidance this quarter. Some of it is a function of the environment; we’ve seen a sequential slowdown in volume growth, some of it is a function of the stimulus spending that’s going away, and some of it has to do with slow recovery in corporate travel.

PayPal announced a new deal with Amazon.com Inc on Monday that will allow U.S. users to pay for shopping at the eCommerce giant using Venmo from next year.

According to Katri, the stock price struggled in Q3 on speculation that total payment volume was down at Venmo. But at $60 billion, he noted, it is now clear that such wasn’t the case, and the Amazon deal opens further prospects for future growth.

In total, PayPal processed $310 billion worth of payments in Q3, up 26% from last year (31% excluding eBay) but down $2.5 billion versus analysts’ expectations. Katri also said the payments company could have made its combination with Pinterest work as well but blamed timing for why PayPal backed out of it.

Q3 financial performance

PayPal reported $1.09 billion in net income (92 cents per share) versus the year-ago figure of $1.02 billion (86 cents per share). On an adjusted basis, the payments company earned $1.11 on $6.18 billion in revenue or 12.5% higher than the same quarter last year.

According to FactSet, experts had forecast $1.07 of EPS on $6.23 billion in revenue.

Future guidance

For the full year, PayPal now forecasts a downwardly revised $25.3 billion to $25.4 billion in revenue, including up to $6.95 billion it expects in Q4. In comparison, analysts are calling for $7.24 billion in revenue for the fourth quarter and $25.78 billion for the full year.

PayPal is guiding for $1.12 in per-share earnings this quarter versus the Refinitiv consensus of $1.27.