PayPal, the global leader in online payment solutions, has seen a decline in its shares as a result of a drop in active accounts and disappointing guidance for the future. The company’s shares have declined by approximately 11%, highlighting investor concerns about the company’s growth prospects.
Despite exceeding revenue and earnings expectations in its Q4 2023 report, PayPal experienced a decrease in active accounts. In Q4, the company reported an impressive 8.1% increase in revenue, reaching $8 billion, surpassing analysts’ estimates by $130 million. Additionally, the company’s adjusted earnings per share (EPS) of $1.48 also exceeded analysts’ forecasts by $0.12.
Total payment volume (TPV) showed a promising 15% increase to $409.8 billion, while payment transactions per active account rose by 14%. However, the total number of active accounts dropped from 435 million to 426 million, a concerning trend for the company.
PayPal’s guidance for 2024 fell short of Wall Street’s forecast, with adjusted EPS expected to be around $5.10, compared to the forecasted $5.53. This cautious outlook has disappointed investors, who had hoped for more robust growth from the company.
To address these concerns, PayPal brought in a new CEO, Alex Chriss, who aims to re-accelerate the company’s growth. However, investors are showing disappointment with the current progress of the company.
Despite the decline in PayPal’s shares, Goldman Sachs analyst Michael Ng believes that the cautious outlook might eventually turn out to be a positive for the company. Ng has reiterated his Buy rating on PayPal shares and expects a 32% surge in the stock over the next year, indicating optimism about the company’s future prospects.
Overall, PayPal’s performance in Q4 2023 has been mixed, with strong revenue and TPV growth but a decline in active accounts. The company’s new CEO will need to address these challenges in order to regain investor confidence. Despite the recent decline in shares, analysts have expressed a moderate buy consensus rating on PayPal, with an average price target of $69.23.
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