Paypal Plunges Despite Earnings Beat

Despite better-than-expected Q1 results, PayPal (PYPL:US) shares trade as much as 11% lower on Tuesday.

The key driver of the selloff is the fact that the management lowered the adjusted operating margin outlook, saying it won’t grow as quickly as it had anticipated.

For Q1, the company reported an adjusted EPS of $1.17 on revenue of $7.04 billion, topping the average analyst estimate for earnings of $1.10 on sales of $1.10. Total payment volume rose 9.8% to $354.5 billion, ahead of the $349.5 billion expected.

“PayPal had a very good start to 2023 and delivered stronger than expected performance in the first quarter. We’re working hard to continually improve our already popular checkout and digital wallet experiences, and it is beginning to pay off,” President and CEO Dan Schulman said in a press release.

On the guidance front, PayPal said it expects to report Q2 adjusted EPS of $1.16 on revenue growing 6.5% - 7%. The consensus was looking for earnings of $1.17 on sales growth of 7%.

On a more positive note, the payments giant now sees adjusted EPS at $4.95, ahead of the $4.88 expected by analysts and the $4.87 that the company expected earlier. 

PayPal stock attracted solid buying interest recently. As far as Congress is concerned, Representatives Earl Blumeaneur, Josh Gottheimer and Michael McCaul all reported trades in the stock.

Most notably, Rep. McCaul spent over $100,000 on PayPal, buying the stock on February 14 when it closed at $77.26. 

PayPal shares were exchanging hands at $67 apiece on Tuesday.