Why Did PayPal Lose 7% of Its Value?

Following the release of the company’s Q3 results, shares of PayPal (NASDAQ: PYPL) are down around 7% in pre-open Friday trade.

In contrast to the average estimate of $0.96 on $6.82 billion in revenue, PayPal posted EPS of $1.08 on revenue of $6.85 billion. To reach $336.97 billion, the total payment volume (TPV) climbed by over 9%. A little behind the projection of 433.2 million, the business also stated that it had 432 million active accounts. The operating margin was 22%, above the consensus estimate of 19.8%.

Following the release of the company’s Q3 results, shares of PayPal (NASDAQ: PYPL) are now down approximately 7%. PayPal surpassed the average estimate of $0.96 EPS on $6.82 billion in revenue by reporting EPS of $1.08 on $6.85 billion in revenue. TPV, or total payment volume, climbed by over 9% to $336.97 billion. Additionally, the business stated that it had 432 million active accounts, which is only under the expectation of 433.2 million. Compared to the consensus estimate of 19.8%, the adjusted operating margin was 22%.

But the weaker-than-expected Q4 outlook hurt shares. According to PayPal, it anticipates reporting adjusted EPS in the $1.18 to $1.20 range on sales of $7.38 billion. On revenues of $7.73 billion, analysts predicted a $1.18 EPS for the fourth quarter.

PayPal lowered its revenue forecast for the entire year due to the fourth quarter’s weaker-than-expected outlook. The updated prediction is for sales of $27.5 billion, less than the $27.81 billion consensus and down from the preceding $27.85 billion. Positively, the FY EPS prediction is improved from $3.92 to $4.08 (the midpoint) and beats the $3.93 expectation.

Despite the reduction in the forecast, Morgan Stanley analysts are still bullish on PYPL. According to them, the business executes well under the situations it can manage.