PayPal Q1 Earnings: Will weak margin forecasts pull PayPal stock lower?

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PayPal Q1 Results

PayPal share prices dropped about 5% in pre-market trading on May 9 2023, as weak operating margin forecasts for the upcoming quarters negatively affected investor sentiments.

Analysts believe that a high interest rate environment coupled with mass layoffs and recession fears together have discouraged investors from making high ticket expenses, which in turn is affecting margins for such players.  

For a more detailed analysis into PayPal stock, click here.

PayPal Q1 Results: Highlights

  • PayPal cut its outlook for annual operating margin, overshadowing its profit forecast raise.
  • PayPal expects income margins to expand 100 basis points this year against earlier forecast of a 125-basis-point growth.
  • PayPal reported a profit of $795 million in Q1FY23, compared to a profit of $509 million in the corresponding quarter last year. 
  • PayPal did not declare any dividend during the quarter.
  • PayPal expects net revenues to grow ~6.5%-7% in the upcoming quarter. 

PayPal Q1 Results: Share Price Performance

PayPal share price performance0.8%1.4%-5%-5%

(Data as on May 8, 2023)

PayPal Q1 Results: Revenue Performance 

PayPal reported a near 8% jump in quarterly revenues for the Jan to March 2023 period and the company also expects revenues to gain  approximately between 6.5%-7% for the upcoming quarter ending June 2023. 

 Q1FY23Q1FY22% change
Total Income$7 billion$6.5 billion7.7%

PayPal Q1 Results: Net Profit

 Q1FY23Q1FY22% change
Net Profit$795 million$509 million56%

PayPal's net profit soared about 56% on account of strong revenue gains and comparatively subdued expenses growth. The company's operating expenses amounted to $6 billion, compared to $5.7 billion in the corresponding quarter last year. 

PayPal Q1 Results: Analyst View

  • Renowned brokerage Jefferies cut down its share price target to $75 from $80.
  • Piper Sandler marginally raised its share price target to $83 from $82.
  • Susquehanna cut down its share price target to $78 from $80. 

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.