PayPal plummets as spending cuts and eBay breakup unfolds
PayPal (NASDAQ:PYPL) (SA:PYPL34) shares tumbled 26% at 2:39 pm ET on Wednesday, quoted at $129.70, as a result of lower online spending and full shutdown with the old eBay controller (NASDAQ:EBAY). The share's BDR dropped 25% to R$34.33.
The company is still feeling the brunt of eBay's transition to its own payments platform, a rupture that took place in 2015, when PayPal was spun off from the e-commerce company.
The eBay split is expected to cost $600 million in revenue in the first half of this year, Chief Executive Dan Schulman told Reuters analysts on a conference call. That will put revenue growth this quarter at just 6%, nearly half of analysts' forecast and less than half of the 13% growth recorded in the last quarter of last year.
Compared to the 26% growth in the third quarter, the expansion in total payment volume dropped to 23% in the fourth. The pandemic forced companies to adapt to the digital environment and acceptance of the PayPal platform among consumers and merchants grew. This movement is now being reversed as consumption returns to normal levels and the return of purchases in physical stores.
PayPal anticipates adding just 15 million to 20 million new active accounts this year, just a third of the 49 million aggregated in 2021.
The company closed the month with 426 million active accounts. According to Bloomberg, the projection of 750 million active accounts by 2025 was abandoned, a decision resulting from the discovery of 4.5 million accounts created illegitimately.
Adjusted earnings per share of $1.11 was higher from the year-ago period of $1.08, but still fell short of estimates.