PayPal Tumbles as Profit Growth Forecasts for 2024 Disappoint

120

PayPal Holdings Inc. saw a decline in its shares late Wednesday following its announcement that it expects earnings to remain flat this year as part of its ongoing efforts to reduce costs and streamline operations.

The fintech firm’s shares fell by 7.9% to US$58.24 in New York, despite having gained 3% earlier this year up to the close of regular trading.

In the fourth quarter, payment volume surged by 15% to US$409.8 billion, surpassing analysts’ expectations of US$403.6 billion. Adjusted earnings came in at US$1.48 per share, exceeding the average forecast of US$1.36.

For the entirety of 2024, PayPal anticipates adjusted earnings to remain at US$5.10 per share, unchanged from the previous year, according to a statement from the San Jose, California-based company.

Last month, PayPal announced plans to reduce its workforce by about 9%, part of CEO Alex Chriss’s strategy to enhance profitability. Chriss attributed PayPal’s sluggish progress to its cost base and complex structure in November.

Chriss mentioned in an interview that the company still has various expenses to reassess beyond its headcount as it strives to enhance efficiency. “We’re continuing to look across the entire organization,” he stated.

The company intends to repurchase at least US$5 billion of its stock this year, as outlined by CFO Jamie Miller during a conference call with analysts.

Fourth-quarter net revenue reached US$8.03 billion, marking an 8.7% increase from the previous year. Transaction margin dollars, a critical gauge of expense control, remained relatively unchanged from the previous year at US$3.67 billion.

During the conference call, Miller stated that PayPal plans to discontinue providing annual revenue guidance, opting instead to do so on a quarterly basis. “We are just doing too many things,” she remarked. “We have to make decisions to stop doing things, and just focus.”