Shares in PayPal Holdings tumbled Thursday after the e-commerce firm reported June-quarter earnings and revenue that edged by estimates. The company's third-quarter profit outlook for PYPL stock also narrowly beat views as analysts await the announcement of a new chief executive.
Reporting after the close on Wednesday, PayPal said earnings for the second quarter that ended on June 30 were $1.16 a share, up nearly 24% from a year earlier. The digital payments company said revenue climbed 7% to $7.3 billion.
Analysts expected PayPal earnings of $1.15 a share on revenue of $7.27 billion. A year earlier, PayPal earned 93 cents a share on sales of $6.8 billion. For the September quarter, PayPal predicted earnings of $1.23 a share at the midpoint of its outlook. Analysts had called for earnings of $1.21 a share.
PayPal stock plunged 9% to 66.60 in premarket trading on the stock market today.
"We believe the most acute issue with the print will be the 7% year-over-year decline in transactional gross profit, which missed Street estimates by 5%," Jefferies analyst Trevor Williams said in a note to clients.
Total payment volume processed from merchant customers in the quarter climbed 11% to $376.5 billion. Analysts had projected total payment volume of $368.9 billion.
PayPal users fell by 2.5 million during the second quarter to 431 million versus estimates of 432 million.
PayPal Stock: Search For New CEO
Current CEO Dan Schulman plans to retire at the end of 2023. Schulman will continue to serve on the PayPal board of directors after he exits as CEO.
In opening comments on PayPal's earnings call with analysts, Schulman said: "We are in the very final stages of the process with several outstanding candidates, all of whom are highly qualified and excited to lead PayPal as we go into our next chapter of growth."
Heading into the PayPal earnings report, some analysts were focusing on the new CEO.
"The swing factor for shares on the print could therefore be whether we get clarity on the outcome of the CEO search," Bank of America analyst Jason Kupferberg said in his note to clients.
San Jose, Calif.-based PayPal has evolved from an online checkout site to a mobile shopping and person-to-person payments site. Meanwhile, competition has heated up with Square-parent Block and others.
Further, after plunging 62% in 2022, PayPal stock has advanced 2% thus far in 2023 heading into the PayPal earnings report.
PYPL stock has retreated from an all-time high of 310.16, reached on July 26, 2021. Shares hold a Relative Strength Rating of only 25 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
