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PayPal’s “prudent” revenue growth forecast cut sinks shares

(Reuters) -Online payments firm PayPal Holdings Inc (NASDAQ:PYPL) cut its annual revenue growth forecast in anticipation of a broader economic downturn and said it did not expect much growth in its U.S. e-commerce business in the holiday quarter.

Shares in PayPal, owner of the popular Venmo payments app, fell as much as 11% in extended trading on Thursday after the company also reported a decline in third-quarter profit, but they later pared some losses and were down at 9%.

The San Jose, California-based company cut its adjusted growth outlook for the year to 10% from 11% previously. Analysts were expecting 10% growth, according to Refinitiv.

As inflation soars to the highest in decades and worries of a potential recession escalate, companies are issuing conservative forecasts to reflect an expected tightening in consumer spending.

Chief Executive Daniel Schulman blamed “a challenging macro environment, slowing e-commerce trends and an unpredictable holiday shopping season” for the company’s prudent forecast.

“We think that e-commerce is going to be pretty muted in the fourth quarter,” Schulman said in a post-earnings call.

Last week, payments giant Mastercard Inc (NYSE:MA) also forecast weaker-than-expected revenue growth for the holiday quarter.

But Block Inc, a payments platform led by Twitter founder Jack Dorsey, posted a rise in quarterly revenue on Thursday on the back of a strong online payments business, sending its shares up 14%.

PayPal posted a lower adjusted profit of $1.08 per share for July-September. Analysts had expected a profit of 96 cents a share.

The company said it expects $900 million in cost savings this year and at least $1.3 billion next year.

“Their cost saving plans are taking hold but in the ultra-competitive payments world, market share gains don’t seem to be enough to placate investors,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.


Source: Economy - investing.com

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