CNA – PayPal Holdings Inc shares slumped nearly 17 per cent yesterday as investors questioned the company’s growth prospects after it disclosed a big hit to revenue from the impending loss of marquee client eBay Inc.
The share slide set the stock up for its lowest opening since May 2020, as PayPal also listed out a number of other factors hurting its performance, including high inflation, the end of stimulus checks and the impact of the ongoing supply chain issues on cross-border volumes.
At least 11 analysts cut their price targets on the stock and BTIG downgraded its recommendation to “neutral” from “buy”.
PayPal’s operating agreement with former parent eBay ended and the online marketplace’s transition to its own payments platform is impacting transaction volumes, the company said on Tuesday. EBay’s transition is expected to put USD600 million of revenue pressure in the first half of this year, Chief Executive Officer Dan Schulman said.
“Taken together, supply chain management problems, inflationary pressure on spending by low income customers and ongoing steep declines in eBay volumes created stiff headwinds exiting 4Q/21 that will persist at least through 1H/22,” Evercore ISI analysts wrote in a note.