PayPal Shares Slump Despite Beating Wall Street Revenue Expectations in Q3 2022

UTC by Benjamin Godfrey · 3 min read
PayPal Shares Slump Despite Beating Wall Street Revenue Expectations in Q3 2022
Photo: Depositphotos

Paypal currently comes off as one of the dominant fintech firms in the United States, and it has a strategy of expanding its available product suite to meet all classes of users.

The shares of PayPal Holdings Inc (NASDAQ: PYPL), an American multinational financial technology company operating an online payments system, are trailing down in the pre-market today despite the company reporting a revenue beat in its Q3.

The company said its revenue for the third quarter came in at $6.85 billion as against the $6.82 billion that was projected according to analysts polled by Refinitiv. Earnings Per Share (EPS) came in at $1.15, up from the $0.96 that was projected by analysts. The EPS grew by a massive 26% year on year.

Paypal currently comes off as one of the dominant fintech firms in the United States, and it has a strategy of expanding its available product suite to meet all classes of users. The company said it is working with Apple Inc (NASDAQ: AAPL) to enhance the payment functionalities for its core PayPal and Venmo apps.

Per the terms of the deal, merchant customers in the United States can receive contactless payments through their mobile wallets. Additionally, PaypPal and Venmo network-branded cards can also be added to the Apple Wallet.

Paypal’s business highlights also revealed some impressive figures including its Total Payment Volume (TPV) of $337.0 billion, growing 9% and 14% FXN. The San Jose, California-based payment giant also recorded an operating cash flow of $1.9 billion, growing 29%, as well as a free cash flow of $1.8 billion which grew 37%.

“We delivered strong third-quarter results. We will continue to invest against our key priorities to advance our leading position in digital payments and commerce. We’re very pleased to be working with Apple to enhance our offerings for our PayPal and Venmo merchants and consumers,” said Dan Schulman, PayPal President, and CEO.

Why Are PayPal Shares on the Downtrend?

At the time of writing, PayPal shares are down 6.92% in the pre-market to $71.25, underscoring how skeptical investors are about the prospects of the company being able to keep up with its current stellar performance.

PayPal’s business is still also plagued with some notable headwinds as every other progressive business. The growing rate of inflation and the Federal Reserve’s aggressive monetary tightening remains a hurdle to contend with.

Considering the uncertainty that surrounds the macro economy, PayPal has given a very conservative estimate based on what to expect in the fourth quarter.

As showcased by PayPal, it expects its revenue for the fourth quarter to come in at $7.38 billion, a figure that is below the $7.74 billion forecast by Wall Street Analysts. The company, however, raised the EPS for the fiscal year which it said is bound to benefit from its “ongoing productivity initiatives.”

In its projections, PayPal said it hopes to add as many as 8 – 10 million new net active accounts for the current fiscal year, a figure that was not bullish enough to pacify investors from dumping the company’s shares.

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Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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