In Just Over a Year, PayPal Stock is Down Nearly 65% Thanks in Part to Stagnating Revenues and Shrinking Margins Caused By the Global Pandemic and its Effect on the Supply Chain and Consumer Spending
With the pandemic behind us and PayPal posting its second consecutive positive earnings report in a row, PYPL stock has rallied nearly 40% in the past month and still presents investors with a massive amount of potential upside
PayPal’s (NASDAQ: PYPL) most recent earnings report, published on August 2, 2022, indicates that the company is rounding a corner and improving its business prospects following the worldwide pandemic. PayPal beat analysts’ expectations for revenue ($6.8 billion, beat by $20 million) and non-GAAP EPS ($0.93, beating by $0.06).
The company was able to grow revenues by 9% YoY. Impressive in its own right, it’s even more remarkable given that these results come after eBay (NASDAQ: EBAY) transitioned away from PayPal as its primary payment method. The company did suffer a reduction in its EPS on a YoY basis, but that’s tied to the loss of eBay and shouldn’t affect the company’s plans.
Perhaps most important for the company’s future results are the estimated 10 million new users they expect to add to the platform in 2022; at the end of Q2, total active users were 429 million, up 6% YoY.
Finally, the company’s cash flow has been very promising. After posting $1.2 billion in cash flow from operations during Q1, the company was able to generate $1.5 billion in operational cash flow in Q2. Q2 free cash flow was $1.3 billion, compared to $1.1 billion in Q1.
PayPal’s positive results led the Board of Directors to believe that the stock is undervalued, as the company announced a $15 billion share buyback. This amounts to more than 10% of the company’s current market cap, meaning investors should realize significant gains from the buyback.
Shares of PayPal are currently trading at $103.00 per share, up +1.47% on the day. YTD PYPL stock is down -47.18%.
