What's Fueling PayPal's Post-Earnings Skepticism?

Core Viewpoint - PayPal Holdings experienced a significant stock price decline despite exceeding earnings expectations and raising full-year profit guidance, primarily due to concerns over slowing growth in branded checkout Total Payment Volume and a noted softening in U.S. retail spending [1][7]. Financial Performance - PayPal reported an adjusted EPS of $1.40, exceeding analyst estimates by $0.09 and the midpoint of its guidance range by $0.10 [4]. - Total Payment Volume (TPV) reached $443.5 billion, approximately 3% higher than projections, while transaction margin dollars exceeded forecasts by 2% (or $78 million) [5]. - Active accounts totaled 438 million, with a slight sequential improvement in monthly active users of 52% [5]. - Management raised full-year adjusted EPS guidance to $5.15–$5.30, indicating a 12.5% growth at the midpoint, up from prior guidance of $4.95–$5.10 [5]. Analyst Ratings and Price Targets - Patrick Moley of Piper Sandler maintained a Neutral rating with a price forecast of $74 [2]. - Andrew Boone of Citizens JMP Securities reiterated a Market Outperform rating but adjusted his price forecast down from $110 to $100 [3]. Growth Concerns - The slowdown in branded checkout TPV growth to 5% from 6% in the previous quarter and the CFO's comments on softening U.S. retail spending contributed to the stock's nearly 9% drop post-earnings [7]. - Analysts noted that while TPV growth was strong, transaction margin dollars showed signs of deceleration, which may impact future performance [10]. Strategic Outlook - Moley expressed cautious optimism regarding PayPal's strategic shift to become an omnichannel commerce hub, though he warned that this transformation may require continued investment that could pressure margins [8]. - Boone highlighted ongoing product innovation and improvements in consumer and merchant experiences as key to future growth, projecting gradual reacceleration in growth [14]. Venmo Performance - Venmo's TPV grew 45% year-over-year, with monthly active accounts for Venmo debit cards rising 40%, indicating its critical role in PayPal's long-term growth strategy [9].