What led to the stock decline: Paypal Holdings Inc (NASDAQ: PYPL) stock lost over 3.9% on 31st January, 2019 (as of 10:49 am GMT-5 ; Source: Google finance) after the company posted mixed results for the fourth quarter of FY 18. During the fourth quarter, net income fell to $584 million from $620 million, a year earlier. PYPL in the fourth quarter of FY 18 has reported the adjusted earnings per share of 69 cents, while adjusted revenue growth of 14 percent to $4.23 billion in the fourth quarter of FY 18, missing the analysts’ estimates for revenue of $4.24 billion. The revenue miss in the fourth quarter was due largely to slower growth than expected for payments processed for eBay and unfavourable foreign exchange rates.
For the first quarter, PayPal expects revenue to be between $4.08 billion and $4.13 billion, falling short of analysts’ average $4.16 billion estimate. PayPal expects revenue to grow 11 – 12% at current spot rates and 11 – 13% on an FX-neutral basis. The company reaffirmed its full year outlook. For the current quarter ending in April, Paypal expects its per-share earnings to range from 66 cents to 68 cents.
The company expects full-year earnings in the range of $2.84 to $2.91 per share. PayPal expects revenue to grow 16 – 17% at current spot rates and 16 – 17% on an FX-neutral basis, to a range of $17.850 – $18.100 billion. The full year 2019 revenue growth guidance includes an expected decline of approximately 3.5 percentage points for full year 2019 related to the sale of U.S. consumer credit receivables to Synchrony.
Positive Side: PayPal added a record 13.8 million new active accounts in the fourth quarter, compared to an increase of 8.7 million a year earlier. Around 2.9 million of those accounts were added through acquisitions. The company processed $164 billion in payments over the period, up 23 percent from a year earlier. Venmo, its peer-to-peer payment app popular with younger consumers, processed $19 billion of payments in the fourth quarter, up 80 percent from the same quarter a year ago.
PayPal said it had made progress in plans to cash in from the app, whose basic peer-to-peer service is free – through initiatives such as the Venmo debit card and an instant cash out service. The company predicts that Venmo will contribute $200 million in revenue in 2019.