When PayPal (PYPL) reported a weak outlook for 2022, markets did not seem to care. PYPL stock rallied
after the Q1 report because it is already well off the $310.16 52-week high.
PayPal expects revenue will grow by 11% to 13%. Total payment volume will exceed $1.4 trillion. TPV
will grow by 13% to 15%. GAAP EPS will be up to $2.34. This would still value the fintech giant as a
growth firm. Markets could take back the post-earnings rally by locking profits from the trade. The
company’s weak growth remains a problem. Investors are unwilling to pay a premium for firms issuing
weak prospects.
PayPal earns a “hold” rating.
Microsoft (MSFT) is a well-rounded software giant. Other than its aggressive Activision blizzard
acquisition which it can afford, its business units are strong. For example, productivity and business
process revenue grew by $15.8 billion. Intelligent Cloud posted $19.1 billion in revenue, up by 26% Y/Y.
And despite warnings of a PC slowdown from manufacturers, Microsoft posted $14.5 billion from its PC
division, up by 11% Y/Y.
Microsoft is shining this time. Alphabet’s Google is not. Alphabet reported an unexpected slowdown for
YouTube. Still, YouTube Shorts will take TikTok’s market share.
Investors should be bullish on MSFT stock and neutral on GOOG stock.
