- Payments platform has rallied 15% in 2023 so far
- Investors want better cost discipline
- Revenue to fall short of last year’s Q4
It used to be a set and forget long-term hold growth stock, but the ground has collapsed under PayPal (PYPL:NASDAQ) and its share price now trades at 2019 levels.
The question now is, are the shares ripe for recovery or have they become a value trap? The digital payments platform’s fourth quarter results after the markets close on 9 February (Thursday) may help shape an answer.
The financials will probably show a hit from a slowdown in its core e-commerce business due to a combination of lower consumer spending as well rising competition in the mobile payments processing industry. According to data from Investing.com, options market trades are pricing in a possible implied share price move of 9.3% in the wake of the update, either up or down.
FORECASTS TRIMMED 16.5%
Analysts have been paring back forecasts over the past couple of months with earnings per share, or EPS, 16.5% lower than what they were three months ago.
Consensus currently calls for EPS of $1.20, about 8% up from the $1.11 reported a year ago. This would be on revenue of $6.85 billion, down from $6.92 billion year-on-year.
Greater focus on costs will be what investors want to hear, given accusations that PayPal spent far too much during the pandemic online spending boom. To that end, the company has already committed to cut its workforce by around 7%.
PayPal shares have risen 15% so far this year to $85.52, in line with the general improvement for growth stocks.
