PayPal loses 8% despite strong earnings report 📉

PayPal (PYPL.US) reports Q4 2024 earnings, exceeding EPS and revenue forecasts but failing to impress Investors. PayPal (PYPL.US) has released its Q4 2024 results, beating both earnings per share (EPS) and revenue forecasts, as well as guidance for the coming quarters. However, the total payment volume (TPV) increased by 7% to $437.8 billion, slightly below the expected $438.2 billion. Additionally, the branded transaction volume grew by 6%, falling short of investor expectations—leading to profit-taking. The company also announced a new $15 billion share buyback program, with $6 billion allocated for repurchases in 2025.

• EPS: $1.19 (adjusted) vs. $1.12 expected

• Revenue: $8.37 billion vs. $8.26 billion expected (4% YoY growth)

Strong report, but without a "wow" factor

For Q1 2025, PayPal forecasts adjusted EPS between $1.15 and $1.17, exceeding analysts' average expectation of $1.13. However, this suggests the company expects business growth to stabilize at best on a quarter-over-quarter basis. For the full year, PayPal anticipates EPS between $4.95 and $5.10, slightly above the $4.90 forecasted. The transaction margin improved to 47% from 45.8% in Q4 2023, even as fees declined to 1.91% from 1.96% year over year.

The company reduced its workforce by 10% in 2024 and invested in AI and automation, but investors remain concerned about PayPal’s growth momentum.

• Venmo TPV increased by 10% YoY, with new businesses—including Starbucks, Ticketmaster, and DoorDash—adopting the platform.

• Active Venmo users grew by 20% in 2024, while active Venmo debit cards surged by 30% YoY.

• PayPal also reported a 21% increase in "Buy Now, Pay Later" (BNPL) transactions, with BNPL users spending 30% more on average compared to those using traditional payment methods.

Technical Outlook – PayPal (D1 Timeframe)

PayPal shares are likely to open today below the 50-day moving average on the daily chart. A potential trend strength test could push the stock down to around $80, where the EMA200 is positioned. Shares of PayPal have gained over 40% YoY, giving investors substantial unrealized profits—which, combined with lower margins and increased competition, could weigh on aggressive expansion efforts. Wall Street deemed the company’s guidance cautious, leading to a sell-off—in pre-market trading, PayPal shares are priced at $82 per share.

Source: xStation5