Here I am, a couple of weeks back and I see PayPal down 50%.
Great company I say.
Guidance to double revenue by 2025 they say.
How foolish is the market for punishing this stock so much, I say.
So, I buy.
Comes out today with a 50% decline in EPS year-over-year, and a 20% drop in EPS guidance for full-year 2022.
Fuck you PayPal, you fucking piece of shit company.
For those of you that think that the price drop after-hours is an “overreaction”…. Why?
I personally don't sell on rumours or herd mentality, but rather when there is a fundamental change in the company's milestones. Today, PayPal showed that it's failing to deliver. Massively.
EDIT: Having spent quite some time looking into today's Earnings, along with past releases, I'm beginning to think that the EPS decline is not as bad as it seems.
With any investment, Quarterly updates serve as a benchmark for you to decide whether there's fundamental shifts in the company's execution and/or strategy that could shift the why you invested in the first place.
The reality is that (see the latest Investor Update deck from PayPal's website) https://s1.q4cdn.com/633035571/files/doc_financials/2021/q4/PYPL-Q4-21-Investor-Update.pdf
(1) TPV and Revenue are (excluding eBay) expected to grow at roughly ~20% for FY22 (2022: TPV growing to $1.5T and revenue to exceed $29B)
(1i) Revenue growth includes an eBay decline of $600Mil, which is actually very impressive
(2) Free Cashflow is expected to grow by approximately ~11% for FY22 to $6Bil. This is similar but stronger guidance than the year before.
(3) FY-21 Venmo volume increased 44% to $230Bil
(4) Net income was impacted by:
(4i) Volume-based expenses grew 22.5% and non-transaction related expenses grew 10.4% ◦ Sales and marketing expenses increased 9.6% and technology and development increased 19.1%
Verdict
After relevant research, I firmly believe that after a near 50% correction, a further 10-15% drop is indeed an overreaction to this news. There could be some more selling to follow, but I will personally be buying more.
The latest earnings highlighted some profitability concerns, but PayPal is in no way, shape or form a struggling company.
I am bullish.
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