What to expect from PayPal’s earnings report

After last week’s surprise layoffs at PayPal, all eyes this week will be on the release of the company’s earnings report for the last quarter of 2022.

Stock analysts expect earnings of up to $1.20 a share, which would be an increase of about 7% compared to the fourth quarter of 2021. Analysts also expect revenue to climb roughly 7% to $7.39 billion.

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The company’s stock fell dramatically in 2022, plunging 62% amid a general downturn in the tech sector, before rebounding slightly in the first month of 2023. In response, PayPal announced a $15 billion share buyback program in August and cut roughly 7% of its workforce (some 2,000 jobs) last week.

Both moves suggest the company is looking to lower its operating costs ahead of a possible recession. Any form of economic slowdown would impact PayPal significantly, as the electronic payment company is closely tied to consumer purchasing power and the health of the e-commerce industry.

PayPal stock rebounds in 2023

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The wild, wild west of mobile payments

Even with a headstart, PayPal is struggling to compete with new players in the e-commerce transaction industry. Mobile wallets account for 44.28% of e-commerce transactions worldwide, while over 2 billion people used mobile devices as a method of payment in 2021.

🤑 Venmo: PayPal purchased Venmo in 2013 as a way into the mobile wallet market. More than 90 million people use the app in the US, making it one of the most popular payment methods, mostly for small purchases. Recent research showed that shoppers are 19% more likely to complete a purchase with Venmo over traditional methods of payment.

🍎 Apple Pay: Considered PayPal’s biggest competitor, Apple’s payment technology surged in popularity last year. While PayPal still has a larger market share, Apple and its access to more than a billion iPhone users is closing in fast.

🏦 Zelle: A bit different than its mobile payment rivals, Zelle partners with banks and credit unions in the US to make payments either directly within different banking apps or in Zelle’s standalone app. With more than 100 million eligible users, there’s a good chance you already have access to this mobile wallet.

🤖 Google Pay: Android’s answer to Apple Pay, Google’s payment technology draws on the massive Android OS user base with varying levels of success. Accounting for roughly 10% of in-store mobile wallet payments, it pales in comparison to Apple Pay’s share of the market.

Recent tech layoffs hit the tech world, by the numbers:

1,300: Zoom, the popular web video app and quintessential pandemic brand announced plans to lay off 15% of its workforce on Feb. 8.

12,000: Alphabet announced layoffs affecting just over 6% of Google’s global workforce on Jan. 20.

18,000: On Jan. 31, Amazon announced a fresh wave of layoffs broadly affecting its many departments.

600: Spotify announced on Jan. 23 that it would be downsizing, affecting about 6% of its employees.

10,000: Microsoft announced plans to cut 5% of its global workforce on Jan. 18.

Related stories:

🏰 What to look for in Disney’s first earnings report since Iger’s return

📰 The media got the layoff story wrong

💻 Microsoft is cutting 10,000 jobs in the latest round of tech layoffs

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Source: https://finance.yahoo.com/news/expect-paypals-earnings-report-213300641.html