PayPal Stock Fumbles Despite Record Results, Q4 in Focus

PayPal stock price fell more than 5% after reporting stronger than expected revenue and earnings growth for the September quarter.

The company says earnings and revenue grew at a historic pace during the third quarter as pandemic-related distancing policies have enhanced user’s focus towards online payment platforms.

The shares of payment services company stood among the best performers since the beginning of this year amid strong growth in user’s additions and payment volume.

PayPal stock soared close to 70% since the beginning of this year. The shares are currently trading around $187, down from a 52-weeks high of $215 a share. The analysts believe the dip in share price is presenting a buying opportunity for long-term investors.

Robust Financial performance is backing PayPal stock

The payment services company is among the biggest beneficiary of the user’s move towards online platforms for payment transfers. This is evident from the significant growth in its payment volume.

In the third quarter, its total payment volume came in at a record level of $247 billion, representing a 38% increase from the past year period. The consolidated revenue of $5.46 billion jumped 25% year over year. In addition, the company has converted big revenue growth into massive profits. Its non-GAAP EPS grew 41% from an earlier year period.

PayPal has added 15.2 million net new active accounts during the third quarter; bringing the total active accounts to 361 million.

PayPal stock has upside despite soft Q4 earnings outlook

Shares of PayPal plunged after earnings release as investors reacted to slowing earnings growth. The company expects fourth-quarter earnings growth in the range of 17%-18% Y/Y. On the positive side, revenue is likely to grow by 20%-25%.

The slowing earnings growth is blamed on its growth strategy. The company has been investing aggressively in growth opportunities to expand its revenue base. Meanwhile, the market analysts expect PayPal stock to trade around $250 in the days ahead.