Right on the money – PayPal meets expectations as stock pops 5%

PayPal Holdings (NASDAQ: PYPL) on Wednesday, April 27, after-hours trading rose at one point by 5.7% as they met earnings expectations and beat revenue. It was not all positive though as the company adjusted down its expectations for new accounts for 2022. 

First quarter revenue of $6.48 billion was better than the anticipated $6.41 billion with 2.4 million net new accounts added. Transactional revenue was up 13% year-on-year or $323 billion this quarter versus $339.5 billion in the year-ago quarter. The company also mentioned that due to the suspension of transactional services in Russia a negative impact of $0.03 was subtracted from earnings per share (EPS). 

Expectations for this year’s range in EPS lie between $3.81 to $3.93 which is down from the previously announced range of $4.60 to $4.75.   

Chart and analysts’ predictions 

Shares performance is not something to write home about, in the second half of August 2021, the stock started a downwards momentum and created a long descending channel. Currently, despite the after-hours pop PYPL is trading below daily Simple Moving Averages. 

With inflationary worries, Federal Reserve (Fed) tightening money markets, tech stocks simply can not catch a break. It seems that even positive news evaporates quickly and shares continue trending downward. 

Analysts however are still quite bullish on the stock giving it a moderate buy rating. For the next 12 months, the analysts see the average stock price to be at $163.92 which is almost double the current trading price of $82.61, a whopping possible 98.43% increase. 

PayPal continues to generate significant cash flow as can be inferred from the earnings report, and with analysts’ predictions, the shares seem to have a fair price. However, given the current investing environment coupled with war in Ukraine, inflationary pressures, new Covid lockdowns in China, and an aggressive Fed simply don’t allow stocks to catch a break. 

Therefore, investors should take into consideration the sentiment before deciding to take a plunge. Companies with strong earnings and solid business fundamentals should do well in the long run, as folk wisdom on Wall Street claims.  

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.