Why PayPal’s Q4 Earnings Are Not Good Enough

January 31, 2019 by 247chrislange

When PayPal Holdings Inc. (NASDAQ: PYPL) released its fourth-quarter earnings report after the markets closed on Wednesday, the firm said that it had $0.69 in earnings per share (EPS) and $4.23 billion in revenue. That compared with consensus estimates of $0.67 in EPS and revenue of $4.24 billion, as well as the $0.55 per share and $3.74 billion posted in the same period of last year.

At the end of the latest quarter, PayPal had 13.8 million net new active accounts, compared with an increase of 8.7 million in the fourth-quarter of 2017. Roughly 2.9 million net new active accounts were added from the acquisitions of Hyperwallet and iZettle.

The firm recorded $164 billion in total payment volume, up 23%, or 25% on a foreign-exchange-neutral basis. There were a total of 2.9 billion payment transactions, an increase of 28% for the quarter. Also, an average of 36.9 payment transactions per active account occurred on a trailing 12 months basis, an increase of 9%.

Looking ahead to the first quarter, the company expects to see EPS in the range of $0.66 to $0.68 and revenue between $4.08 billion and $4.13 billion. Consensus estimates call for $0.68 in EPS and $4.16 billion in revenue.

Dan Schulman, president and CEO of PayPal, commented:

In 2018 we set new benchmarks for the company for revenue, net new active accounts and engagement across our platform. We launched new products, strengthened existing relationships, and entered into new strategic partnerships with some of the biggest and most influential global brands in technology, retail, and finance. We greatly expanded our global reach, serving 267 million customer accounts, including 21 million merchant accounts. We believe 2019 will be another strong year for us, and we intend to build on our strengths to extend our leadership as the leading open digital payments platform.

Shares of PayPal closed Wednesday at $92.42, in a 52-week range of $70.22 to $94.58. The consensus price target is $99.77. Following the announcement, the stock was down over 4% at $88.43 in early trading indications Thursday.