PYPL Stock Sheds 18% as PayPal Announces Weak Revenue Growth in Q4 2021

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In 2021 Q4, PayPal onboarded new active accounts. This includes 3.2 million new users after it acquired Japan’s Paidy.

Shares of fintech company PayPal Holdings Inc (NASDAQ: PYPL) plunged nearly 18% as the company reported slow growth in revenue during its 2021 Q4 earnings call. Based on the 2021 Q4 result, PayPal did beyond analyst expectations in addition to a slowdown in revenue growth. Total revenue for the quarter advanced 13% to $6.92 billion, including acquisitions. Although the Q4 revenue was above earlier estimates of $6.87 billion, it is significantly lower than the revenue recorded in 2020 Q4. At the time, PayPal saw a 25% growth in revenue. For the quarter ended 31st of December, PayPal’s earnings per share (EPS) were $1.11, a 40% increase from the previous year. However, the EPS was just a little short of the analysts’ estimates of $1.112.

Also in 2021 Q4, PayPal onboarded new active accounts. This includes 3.2 million new users after it acquired Japan’s Paidy. In total, PayPal added 9.8 million net new active accounts. Despite the high numbers of new PayPal account holders, the company had more new active accounts in Q3. The payment giant recorded 13.3 million net new active accounts in 2021 Q3,

Furthermore, the total payment volume in Q4 was up 23% to $339.5 billion. On the other hand, transaction revenue advanced to $6.4 billion, rising above $5.61 billion reported in Q3. The company’s crypto business, which entails its “buy, sell and hold” product, accounts for a part of its transaction revenue.

PayPal Stock Declines on Slow Revenue Growth in Q4

PYPL is still down in the premarket session as it is currently trading at $146.36. Except for an 11.99% gain in the last five days, PayPal has seen losses. The company has shed over 30% in a year, declined 6.78% since the year began, and dropped 23.69% in three months. Over the past months, PayPal has also fallen 6.07%.

As the financial technology company records consistent declines, PayPal’s outlook for 2022 is below Wall Street estimates. Analysts predicted that the company’s full earnings per share would be $5.22. However, PayPal expects its earnings per share to be within the price range of $4.60 to $4.75%, about 10% lower than analyst estimates. The company has also lowered its revenue growth outlook for 2022. Back in November, PayPal said it expects an 18% revenue growth this year. However, the company is now looking forward to a 16% net revenue growth in 2022.

CEO Dan Schulman told CNBC that the company took a calculated approach on its 2022 outlooks. However, PayPal expects a significant improvement in revenue during the second half of the year. Schulman stated:

“We’ve got the eBay transition to work our way through. This transition is hiding some of the underlying strength of the business.”

The CEO added that eBay put pressure of about $1.4 billion of revenue on the company in 2021 and should be around $600 million this year.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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