PayPal Shares Dive 8% Afterhours with FY24 Guidance Miss

by Arnab Shome
  • The company beat its estimations with its revenue and earnings in Q4 FY23.
  • However, its guidance for 2024 came lower than street expectations.
PayPal
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PayPal (Nasdaq: PYPL) ended the fourth quarter of 2024 with per-share adjusted earnings of $1.48, beating the estimations of $1.36 by the analysts at LSEG (formerly Refinitiv). Its net quarterly revenue came in 9 percent more at $8.03 billion, higher than the street expectation of $7.87 billion.

Solid Growth in Q4

The net income of the California-headquartered company between October and December jumped 52 percent to $1.4 billion, which can be translated to $1.29 per share. Its net income was $921 million or $0.81 per share in the corresponding quarter a year before.

The company handled a total payment volume of $409.8 billion for the quarter, an increase of 15 percent from the previous year. Its operating margin also improved to 21.5 percent from 16.8 percent.

“I’m pleased with our better-than-expected fourth-quarter results,” PayPal’s CEO and President, Alex Chriss, said.

2024 Guidance Miss

However, PayPal's projections for the ongoing financial year fall below anticipated levels. For the first quarter of 2024, the payment company forecasts mid-single-digit growth in year-over-year earnings per share, contrasting with analysts’ consensus expectation of 8.7 percent. For the full year, it anticipates $5.10 per share earnings, lower than the street expectation of $5.48.

This deviation from expectations led to an 8 percent decline in PayPal's publicly traded share price during after-hours trading.

Movement of PayPal shares after on Wednesday and afterhours
Movement of PayPal shares after on Wednesday and afterhours

Although established as a payments company, PayPal has expanded significantly over the years and now has a presence even in cryptocurrencies, among other areas. The company introduced a new artificial intelligence feature last month, which, according to the CEO, was the start of the “next chapter.”

Meanwhile, the company recently decided to cut 9 percent of its workforce, about 2,500 positions.

“We're driving significant transformation across our company and are committed to making the necessary changes to our business to drive profitable growth in the years ahead,” Chriss added. “2024 is a year focused on execution to position PayPal for long-term success.”

PayPal (Nasdaq: PYPL) ended the fourth quarter of 2024 with per-share adjusted earnings of $1.48, beating the estimations of $1.36 by the analysts at LSEG (formerly Refinitiv). Its net quarterly revenue came in 9 percent more at $8.03 billion, higher than the street expectation of $7.87 billion.

Solid Growth in Q4

The net income of the California-headquartered company between October and December jumped 52 percent to $1.4 billion, which can be translated to $1.29 per share. Its net income was $921 million or $0.81 per share in the corresponding quarter a year before.

The company handled a total payment volume of $409.8 billion for the quarter, an increase of 15 percent from the previous year. Its operating margin also improved to 21.5 percent from 16.8 percent.

“I’m pleased with our better-than-expected fourth-quarter results,” PayPal’s CEO and President, Alex Chriss, said.

2024 Guidance Miss

However, PayPal's projections for the ongoing financial year fall below anticipated levels. For the first quarter of 2024, the payment company forecasts mid-single-digit growth in year-over-year earnings per share, contrasting with analysts’ consensus expectation of 8.7 percent. For the full year, it anticipates $5.10 per share earnings, lower than the street expectation of $5.48.

This deviation from expectations led to an 8 percent decline in PayPal's publicly traded share price during after-hours trading.

Movement of PayPal shares after on Wednesday and afterhours
Movement of PayPal shares after on Wednesday and afterhours

Although established as a payments company, PayPal has expanded significantly over the years and now has a presence even in cryptocurrencies, among other areas. The company introduced a new artificial intelligence feature last month, which, according to the CEO, was the start of the “next chapter.”

Meanwhile, the company recently decided to cut 9 percent of its workforce, about 2,500 positions.

“We're driving significant transformation across our company and are committed to making the necessary changes to our business to drive profitable growth in the years ahead,” Chriss added. “2024 is a year focused on execution to position PayPal for long-term success.”

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