Our plans are for revenue growth to then accelerate through the year, and to exit 2022 at a revenue growth rate in line with or ahead of our medium-term guidance.įailed acquisition of Pinterest ( PINS), a few stock downgrades by analyst firms, and a pending steady but slow selloff of the pandemic hot stocks and cryptocurrencies, brought PayPal's share price to $188.58 by the end of December. Nevertheless, PayPal kept the mid-term and the long-term projections unchanged. Dan Schulman mentioned weakening consumer confidence, and lower travel volumes in the months of August and September. However, there were the first signs of management's retreat from the optimistic guidance. We're fortunate in that the margins on our business want to go up. This is a precious opportunity that we have with some of the secular tailwinds. So I'll start by saying that, I would hope that people appreciate and agree with this, but I don't think there's ever been a more important time to invest in our business than right now. The CFO - John Rainey even indicated that that was a great time to invest in the business whose margins should expand. Then in Q3, 2020 it jumped to 40% and over that 40%, we're growing this quarter at 31%, and so these are all really, really strong numbers. MS, I'm talking about MS, was 27%, it jumped up to 29%. We have seen a leap forward in digital, and that is continuing, if you look at it in our MS and John will talk about it in Q4, and as we look next year. Our MS business is going from strength to strength. The CEO - Dan Schulman touched on the growth subject during the call: There was still a notable amount of time on the call spent on subjects such as Buy Now, Pay Later (BNPL), cryptocurrencies, and strong uninterrupted growth. On November 8th, 2021, PayPal announced its FY2021 Q3 earnings which were in line with the company's expectations. This outlook just propelled the ongoing euphoria and kept buyers acquiring stakes in the business.Ģ021 Revenue Outlook (PayPal) November 8th, 2021 - FY2021 Q3 Earnings Call The projections included a $110 trillion total addressable market (TAM), $50.0+ billion in revenue by 2025, US digital market penetration of around 24%, 750 million active accounts, $2.8 trillion in total payment volume (TPV), or 22% EPS growth CAGR by the same year. In February 2021, the company held its Investor Day, where it gave a rosy outlook to its shareholders. That led to an unprecedented stock price appreciation of companies such as PayPal, Block ( SQ), and Affirm Holdings ( AFRM). Stimulus checks and money printing accelerated online spending and the growth of the digital payments space. It started just like for many other companies, also called "pandemic winners" when the central banks and governments intervened in response to the deepening health crisis of March 2020. PayPal's story is a great example of a bubble in the financial market which influenced the company's management judgment. Thus, a value investor should always concentrate on business fundamentals and remain conservative when valuing a company. It also gives a perspective on how inefficient the market can be. The article provides insight into PayPal's road from the peak of euphoria to a current bottom of pessimism in terms of both - the outlook and the share price. Will the management succeed in successfully navigating the company in difficult times without falling further behind its previous outlook? In a short period of time, reality hit the business hard which resulted in missing expectations, lowering projections followed by falling the stock price. PayPal management became a victim of the broad pandemic-related euphoria by projecting unsustainable growth into the future. On the other hand, there are risks related to the seemingly unavoidable global recession, reduced consumer spending, or competition. ![]() From then on, PayPal investors experienced a tough ride downhill seeing the company's market cap slashed by 73.9% by now.ĭespite the negative press and the ongoing global slowdown, PayPal may have a unique chance to adapt, monetize emerging opportunities, and return to the stellar growth it once had. ![]() Its stock price soared from the pandemic lows of $85.26 to an all-time high of $308.53 on July 23, 2021. One of the beneficiaries of the stay-at-home policies introduced in many countries, stimulus checks, and online activity boom was PayPal ( NASDAQ: PYPL ). ![]() As in any economical shock on such a scale, there were winners and losers. ![]() The global health crisis of 2020 led to unseen social developments and financial turmoil.
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