• Tue. May 28th, 2024

Should You Buy PayPal Shares Following Q3 Results?

Barry Douglas

ByBarry Douglas

Nov 6, 2022
  • PayPal announced 3rd-quarter results on Thursday.
  • The overall payment volume increased by 14% in the third quarter.
  • PayPal still boasts a steady cash flow.

PayPal Holdings, Inc. announced robust Q3 outcomes this Thursday. The stock traders under the NASDAQ: PYPL ticker. Meanwhile, the firm’s management lowered projections for the upcoming quarters again.

Overall Payment Volume Gained 14% in Q3

PayPal announced robust 3rd-quarter results on Thursday. The company’s total revenue gained 10.8% year-on-year to $6.85 billion, briefly beyond expectations, whereas earnings per share beat by $0.12 to $1.08.

Meanwhile, the payment volume noted a 14% increase to $337 billion during the 2022 financial year Q3 from the 2021’s same period. Moreover, the payment giant added 2.9M new active accounts.

The pessimist news is that the firm’s management again lowered expectations for the upcoming quarter. Also, it suggested that new active accounts and revenue in 2022 might fall beneath the previous guidance.

PayPal expects 8 million – 10 million new accounts in FY 22 vs. the 10 million previous guidance, whereas its revenue should hover at 27.53 billion, lower than the $27.85 billion earlier estimate.

Andrew Jeffery, Trust Securities analyst, said he anticipates the firm’s revenue to increase quicker than Amazon and lag MasterCard and Visa’s predicted low-to-mid-teens growth. He added that PayPal would struggle over time than eComm due to its substantial off-Amazon share.

Paypal’s business model remains resilient against recessions, and payment services demand is not overly cyclical. The firm continues to boast massive cash flow, generating $1.77 billion in Q3 cash flow on $6.85 billion in revenue.

That translates to a 26% free cashflow margin, which stays 7% up than the past quarter. PayPal’s $85,71 billion market cap places the company above MasterCard, and PayPal remained cheaper on price-to-sales.

The price-to-sales ratio (revenues/market cap) has PYPL trading at 3.17, lower than MasterCard’s P/S at 14.15.

Technical Analysis

PayPal saw its shares weakening by over 60% after hitting a 2022 high on 4 January at $196.10, and risks of more declines prevail. The price has dropped beneath the ten-day MA again, confirming the stock is yet to bottom.

The current support hovers at $70, whereas $90 represents an initial resistance. Price plummets beneath $70 would reveal a sell sign, opening the path to $65. Meanwhile, price upticks past $90 would clear the road to the resistance at $100.
Editorial credit: Ink Drop / shutterstock.com

Barry Douglas

Barry Douglas

Barry Douglas, a seasoned online trading expert, enriches Big Trends Signals with his extensive industry experience, writing insightful guides and comprehensive reviews to assist traders navigate digital markets.

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