5/2/2023 0 Comments Ebay automailerWhile PayPal is expecting revenue growth to be between 15% and 17% in fiscal 2022, non-GAAP EPS is expected to be between $4.60 and $4.75, which would result in low single-digit growth. Problem: Temporary HeadwindsĪnother reason for the sell-off is the temporary headwinds for PayPal, which are also reflected in the weak guidance for fiscal 2022. And this is already including $0.85 in earnings per share decline (or headwind) due to lower eBay ( EBAY) transaction margin dollars. While GAAP earnings per share declined year-over-year, non-GAAP earnings per share increased 19% YoY to $4.60 in fiscal 2021. This resulted in earnings per share of $3.52 in 2021 and $3.54 in 2020. And while revenue and operating income increased, net income declined from $4,202 million in fiscal 2020 to $4,169 million in fiscal 2021 (a decline of 0.8% YoY). Operating income increased from $3,289 million in fiscal 2020 to $4,262 million in fiscal 2021 - resulting in an increase of 29.6% YoY. Compared to $21,454 million in revenue in fiscal 2020, this is an increase of 18.3% year-over-year. In fiscal 2021, the company generated $25,371 million in revenue. ![]() We can start by looking at the last results, that caused the decline two weeks ago. But that view is certainly too simplistic, and we must take a deeper look. When looking at the chart of the last five years, it seems like PayPal's performance is just getting back in line with Visa and Mastercard and after a phase of irrational exuberance, the market came to its senses again. In November 2021, I published an article called " Payment Trifecta on Sale" and while Mastercard ( MA) and Visa ( V) increased 14% in the meantime, PayPal continued to decline and is trading now 38% below the price level at the day of publication in November 2021. But while I would be cautious if Palantir is cheap enough already, I consider Alibaba an incredible bargain at this point, and in case of PayPal, it would also be dangerous to assume the stock is a bargain just because it lost about two-thirds of its previous value. ![]() ( ZM) or Alibaba Group Holding Limited ( BABA). While Meta Platforms declined "only" 43% from its all-time highs so far, PayPal is trading more than 60% below its previous all-time high and with such a steep decline it is belonging in one category with stocks like Palantir Technologies Inc. ( NASDAQ: PYPL ) also declined 25% on one single day due to disappointing results. And only one day before Meta Platforms ( FB ) declined 25% due to disappointing earnings ( I already analyzed the company last week ), PayPal Holdings, Inc. And while the overall market is also tumbling right now (offered explanations might be the looming war between Ukraine and Russia or the FED increasing rates), several technology stocks around the world are deep in the bear market territory. In the last few weeks, I covered several stocks, that sold off pretty steep. ![]() Michael Vi/iStock Editorial via Getty Images
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