PayPal: Back To Multi-Year Lows After Q4 2022 Results
(Preview) Company Update (PYPL US) (Buy)
Summary
PayPal shares have fallen back to their July 2022 lows since Q4 results, as investors worry whether its problems are more than cyclical.
E-commerce has decelerated and may not improve until 2024, and P2P growth has also slowed. PayPal CEO is retiring in 2023.
PayPal is actively cutting costs, and expect these to deliver an 18% EPS growth in 2023 even on mid-single-digit revenue growth.
The key to PayPal's upside is e-commerce growth will resume at 10%+ and PayPal will keep or grow its share in branded checkouts.
We believe PayPal stock is at a “real” P/E of 25x, with limited downside but an outsized return if double-digit growth returns. Buy.
Introduction
PayPal released Q4 2022 results after markets closed on February 9. Shares first rose 3.0% on the following day, but have since fallen by 7.6%, and are now near multi-year lows seen in July 2022 (and in 2018)
PayPal continues to be in the middle of a downturn. A deceleration in e-commerce growth was blamed, and this may not improve i…