PayPal (PYPL) is one name that has been betting on crypto adoption but is also one of several stocks that over the past week have made some crypto-like moves. Shares took a 24% beating in a single session last week after the company disappointed in its latest earnings report.
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While user base growth in Q4 was a letdown, ultimately, like for so many others in recent times, PayPal’s post-earnings woes had less to do with the results themselves, but with a muted outlook.
PayPal’s guide for 2022 came in below its original guidance as it took the goal of reaching 750 million total accounts by the end of year off the table. It also anticipates adding between 15 million to 20 million new accounts in 2022, some way off the 53 million Wall Street had in mind.
There are several reasons for the downbeat outlook, including soft ecommerce demand, the obligatory supply chain pressure, continued negative impact of eBay and low-income consumers cutting back on their spending habits.
Berenberg’s Tammy Qiu call the earnings “clearly disappointing with weaker-than-expected growth in 2022 and user base growth in Q4.”
That said, positives include the ongoing Venmo momentum, with 50%+ growth anticipated in 2022, while a “high level of growth” is also expected from its ‘buy now, pay later’ (BNPL) solutions.
It all hinges on the upcoming “show me” quarters – with the onus on the payments giant to show it has what it takes to fend off increasing competition.
“In our view,” the 5-star analyst summed up, “Investors will want to see the delivery of good quarterly numbers from PayPal in the coming quarters to confirm that it is not losing market share to the other mobile wallets in the market such as Square and BNPL providers, and that it is still well positioned to benefit from ecommerce growth and the increasing level of user engagement from the launch of its ‘super app’ last year.”
It remains to be seen if PayPal can deliver the goods, but for now Qiu has lowered her price target from $310 to $190. Still, shares have room here for 52% growth over the coming months. The Berenberg analyst’s rating stays a Buy. (To watch Qiu’s track record, click here)
The rest of Wall Street largely buys into what this payment giant has to offer. Out of 38 analysts tracked by TipRanks, 28 are bullish on PayPal, while 9 remain sidelined and only one is bearish. With a return potential of ~50%, the stock’s consensus price target stands at $188.65. (See PayPal stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
