PayPal Q2 Preview: Can Shares Rebound?

by contentwriter
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Author: Owen Gate

PayPal will release Q2 earnings for 2022 after the market closes on August 2nd. The company is a digital payments titan that provides secure and smooth transactions to both merchants and customers. With the share performance being very  poor, and bearish predictions from investors, the question remains whether the digital payments company shares can recover. 

Here’s what you can expect:

Share Valuation and Performance

PayPal shares took losses this year, with more than half of the value lost to date, and the trend is expected to continue. 

However, during the past months, PayPal shares have shown promising signs of recovery with swarms of buyers buying the stock. This has led to PayPal outperforming the S&P 500 with a 23% gain in value. 

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The company now has a much more reasonable valuation. PayPal’s forward earnings multiple is 33.9X, well below its median of 49.1X over the last five years and a fraction of highs in 2021 (87%+).

It is clear that many investors feel that the stock is undervalued and have taken the opportunity to buy the company’s shares/

Quarterly Estimates

Analysts are very bearish about this quarter’s earnings, but it is important to note that Paypal has almost always performed better than expected estimates in recent quarters.

PayPal’s top line appears to be in great shape, with a $6.8 billion revenue estimate. This spells an increase of 8.3% from last year’s $6.2 billion.

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With talk of a lurking recession, things aren’t looking suitable for the stock market as a whole. However, analysts have been wrong about this so many times.

Quarterly Performance and Market Reactions

Although PayPal has primarily reported bottom-line results above expectations, the company equaled the Zacks Consensus EPS Estimate in its latest quarter.

PayPal’s quarterly sales figures have been strong, beating its expectations seven times in ten reports. Here is a chart illustrating PayPal’s revenue over time.

The company’s recent profit reports have disappointed the market, highlighting losses over the last three quarters.

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The company’s bottom line is performing well, but not as well as it has in the past. 

That may mean investors are taking a wait-and-see approach to this company, which could cause shares to bounce back up on news that profits are coming in above expectations.

What this Means

PayPal is one of the oldest digital payment companies, and they are one of the most popular options as well. It’s no secret that they have been at the top of their game for a very long time. However, just because they are a fantastic company doesn’t mean their stock price will go up. For now, PayPal’s future remains uncertain, especially in light of all the recent developments. Many investors consider PayPal a great long-term investment. This current slump may be a huge opportunity for those looking to buy the digital payments giant’s stock at a discount.

 

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