PayPal Earnings Disappoint Again, Shares Sink: When Enough Will Be Enough?
Last evening, PayPal (NASDAQ:PYPL) released its quarterly earnings, disappointing investors once again. Alongside Alibaba Group Holdings (NYSE:BABA), this stock has been a significant letdown.
Although the company's numbers have shown a return to growth, the stock still lingers at around -80% from its highs. Judging by the trend in premarket trading, when the stock lost around 10%, it appears likely to experience even more declines.
That said, let's look at some numbers from the latest quarterly report (4Q 2023):
As for Guidance 2024, these are the company's expected figures:
Now, let's analyze the decline after the quarterly results. It is primarily driven by what the market is demanding from PayPal today.
The markets need to recognize that despite 4Q 2023 surpassing expectations, it is now history, and the focus has shifted to the future.
Management emphasizes its inability to wield a magic wand and see instant results from innovations, corporate changes, and expense reductions within a mere 3 months.
Hence, 2024 was declared a «transition year,» acknowledging the time required for recent initiatives to bear fruit.
Adding to the complexity, PayPal is currently viewed as a 'sell' stock amid uncertainties. This complicates shareholders' portfolio management.
Turning to strengths, explored with the assistance of InvestingPro:
Valuations: The stock, having declined over 80% from its highs, is now attractively valued, with a P/E ratio around 11X—a significant undervaluation in both the stock and the sector.
Profitability: Despite the post-COVID period challenges, the stock continues to generate profits, with earnings rebounding to positive growth values.
Shareholder Benefits: A significant buyback program utilizing the 5
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