[Earnings Season] Is PayPal is a buy now?
$PayPal(PYPL)$ recently released a discouraging fourth quarter earnings on 2nd Feb, causing the stock's price to fall sharply. As of 18 Feb, PayPal has dived past its 52-week low price, and is projected to continue plumetting. In this report, we will analyse key statistics, financials, and history to decipher if PayPal is a buy.
Earnings Report:
PayPal reported fourth quarter revenue of $6.92 billion which slightly beats the estimates of $6.89billion. Earnings per Share (EPS) was reported at $1.11 per share, falling short of estimates by $0.01, In the quarter, PayPal did not fufill user growth guidance - The creation of 4.5 million illegitimateaccounts.
Currently, management lowered their forecasts for revenue in 2022 from 18% growth to 15%-17%.
What happened between PayPal and eBay?
eBay's transition to its own payment platform spun off PayPal, stemming PayPal's downgrade in revenue growth. This places about $600 million ofpressure on the company in the upcoming year.
The brightside
Despite PayPal's fourth quarter earnings annoucement, it shouldn't affect the company's business or performance from a long-term perspective. Many investors forget that in FY 2021, PayPal did surpass $1 billion in total payment volume. They also had a growth in revenue and earnings of 18%-19%, which is rather impressive.
This shows that stripping eBay out of PayPal's operational results still ensured more robust growth.
PayPal sizable cash position of $16.3 billion is close to doubling its $9 billion debt warrants investors' consideration. PayPal's ability to generate cash flow is more impressive - An increase in cash from operations and free cash flow of 31% and 38% respectively in the fourth quarter.
What does the future holds?
PayPal recently announced a partnership with Amazon, enabling customers to checkout via Venmostarting this year. Venmo, which is acquired by PayPal in 2013, has 80 million users, offering a buy now, pay later service, available in eight markets.Their long-term prospects shows a lot of room for growth.
Conclusion
The latest sell-off might suggest that the stock of the company might be selling for a bargain, considering its future growth prospects. Shares of PayPal will be likely to continue dropping over the next few days or weeks, but long-term investors might want to consider this high-valued companyto add into their portfolio. This might just be a bump in the road, like any other blue chip companies.
@TigerStars
Source: Nasdaq.com, Luke Meindl - The Motley Fool
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- CY09·2022-02-21they are a buy but just on downtrend. based on future earnings of $5 per share, anything below 100 is buy7Report
- SteadyDoesIt·2022-02-22Given slowing growth, I’d be cautious about entry price. This company appears to be becoming more of a mature company. The current price looks decent if comparing to last year but consider sentiment4Report
- Asphen·2022-02-22yes, it is certainly a buy now. Fair value of 83, conservatively it reach 162.4Report
- Tilon_Song·2022-02-22It's always a good time to buy a stocks when it's undergoing recession, just that you need to strategize and allocate the fund used on it wisely.3Report
- Nylegnave·2022-02-23Would he cautious about entry price for short term and weary about long term growth as they are reliant (at the mercy of) other commerce platforms such as eBay & Amazon, should they play them out.1Report
- ThaiGirl·2022-02-23Don't pay n pay for a stock by being in love with the stock.3Report
- CharlesW·2022-02-23Opportunity for those who want to accumulate3Report
- DanZillaXD·2022-02-23Paypal will always be relevant. It is an easy method for transaction between retailers and businesses.1Report
- Kimlet·2022-02-23yes stock prices going down, if u have money to spare is a good time to invest2Report
- CTLT·2022-02-22Hope its will drop below 100$ can buy in bit by bit2Report
- PavanKumar·2022-02-22Placed a buy at 90.. where do you think it will bottom out?2Report
- All in Tesla·2022-02-22Many stocks has become really cheap during this uncertainty period.2Report
- summerdreamz·2022-02-23thanks for sharing2Report
- TKY1978·2022-02-23Trade with care2Report
- Elsielamwk·2022-02-23Thanks for sharing2Report
- Ken7979·2022-02-23many stocks seems to be unwinding.. back to mar 2020.1Report
- Goodytrader·2022-02-23I think it is a buy2Report
- Matthew Loh·2022-02-22More positive articles! We need to drive from grounds up!1Report
- 木子一休·2022-02-22Great ariticle, would you like to share it?2Report
- Ra007·2022-02-21Is it still falling knives for Paypal [Thinking]2Report