The American PayPal payment system disappointed investors. She warned of a slowdown in profit growth due to the transition of the eBay online auction to its own payment system. Stocks reacted with a strong fall.
Shares of the PayPal payment system fell by 17.92%, to $ 144.3 per paper, following the results of evening trading on the NASDAQ exchange on Tuesday. The company's capitalization decreased to $206.55 billion.
Investors reacted negatively to PayPal's announcement that the revenue and profit of the payment system in the first quarter will be significantly lower than expected, since the company's business will be negatively affected by the refusal of the online auction platform eBay from PayPal payment services.
The agreement between PayPal and its former parent company eBay has ended, and the gradual transition of the online platform to its own payment system negatively affects transaction volumes, the company said. This will lead to a decrease in revenue by about $600 million in the first half of this year, PayPal chief executive Dan Shulman said on a conference call with analysts.
PayPal expects revenue to increase by about 6% in the current quarter compared to last year ($6.03 billion), which is less than the consensus forecast. Analysts surveyed by Refinitiv, on average, expected an increase of 11.7% compared to the first quarter of last year. The company forecasts adjusted earnings per share (EPS) of about $0.87, with analysts' expectations at $1.16.
The total revenue of the payment system for the fourth quarter of 2021 increased by 13% to $6.9 billion compared to the previous value of $6.1 billion. This is the lowest growth rate in two years. Earnings per share were $1.11 compared to $1.08 a year earlier. Both indicators were at the level of market expectations. The total volume of payments over the past three months increased by 23% to $339.5 billion.
PayPal was established in 1998. In 2002, after the merger with eBay, it became the payment division of the company. In 2015, the PayPal payment system was separated into a separate company and conducted an IPO on the NASDAQ exchange. PayPal will present its earnings report for the first quarter of 2022 on May 3.
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