Shares of financial technology company PayPal (PYPL) fell more than 15% in after hours trading following mixed quarterly financial results and weaker than expected forward guidance.
Earnings per share came in at $1.11 U.S. per share compared to $1.12 U.S. per share expected by Wall Street. Revenue amounted to $6.92 billion U.S. versus $6.87 billion U.S. that was expected, according to Refinitiv data.
The company said it now expects first-quarter earnings per share of 87 cents U.S., which is well short of the $1.16 U.S. that analysts anticipated. PayPal forecast revenue growth of about 15% to 17% for full year 2022. Analysts had expected year-over-year revenue growth for 2022 of 17.9%.
Chief Executive Officer (CEO) Dan Schulman said eBay transitioning to its own payment platform and away from PayPal is hurting the company’s results.
eBay had acquired PayPal 20 years ago to handle payments for its website. In 2015, the two companies split, and eBay has been slowly transitioning to its own payment system and away from PayPal.
However, PayPal’s user numbers, measured by net new active accounts, also missed the company’s prior targets. The lower total was, in part, due to 4.5 million “illegitimate” accounts that joined the platform during incentive-based campaigns. Finance and technology companies often offer perks, such as cash bonuses, to drive users to their apps.
While the number was immaterial to PayPal’s customer base of 426 million “it affected our ability to achieve our guidance in the quarter,” the company said in a news release.
PayPal said it expects to add 15 million to 20 million new accounts this year and walked back its goal of 750 million total accounts set by the company last year.
