PayPal reports below-expected quarterly earnings

PayPal’s separation from eBay contributed to the payment service’s disappointing quarterly earnings and guidance this quarter.

PayPal’s quarterly disappoints analysts

It’s time for quarterlies, and among those still coming out, analysts certainly were waiting for PayPal’s Q2, an important figure to check the company’s health, but also to get input on consumption. 

The litmus test has put the payments company’s back against the wall as it misses targets, not only because of its separation from eBay, which now uses its own independent payments system for transactions on its online shopping and auction site. 

Second-quarter revenues were weaker than analysts expected, and net income was down 23% from last year. 

The second-quarter revenue figure came in at $6.81 billion and earnings per share hit $0.93, while adjusted EPS dropped. In contrast, sales are on the rise. 

The figure in itself is not indicative of how healthy the transactional company is, nonetheless it is always a good sign. 

To PayPal’s detriment, it is worth mentioning that the separation that took place with eBay has burdened both of them, and already at the beginning of the year, the CEO expressed his dream of detaching at the end of this phase, at which point eBay would essentially be just a memory for the company. 

While to date PayPal’s shares experience a 2% annual decline, with the quarterly report showing a result with some shadows and some lights, and especially the news of Elliot Management’s interest in the company, they have risen again outperforming the Nasdaq. 

Elliott Management invests in PayPal

The news today is that Elliott Management has invested two million dollars in PayPal and believes that the value of the stock is at its lows and has therefore become attractive.

In a note, Elliott makes it known that PayPal‘s real problem is management and some bad choices made over time, but that it is easily solved and that the stock can have very wide margins, also complicit with the fact that according to some estimates the online payments market can still grow in the 2022/23 biennium by an additional 14%.

Elliott usually invests in companies at their bottom and when they believe that the value of the relevant shares is less than the real market value, the news of their interest has also generated expectations in other investors and speculators who have driven the stock up with their purchases.