PayPal (PYPL) Reports First Earnings As A Stand-Alone Company
PayPal (PYPL) Stumbles in Its Inaugural Quarter
While not disastrous, third-quarter results from digital-payment processor PayPal (PYPL) were certainly lackluster given the amount of hype surrounding the company before and after it was spun off from online-auction giant eBay (EBAY) just a few weeks ago.
Last quarter, PayPal booked an operating profit of $377 million, or 31 cents per share, on revenue of $2.26 billion. Earning were better than the anticipated 29 cents per share, though the top line fell just a tad short of the $2.27 the pros were expecting. Conversely, last quarter's per-share profit levels were shy of the 33 cents earned in the same quarter a year earlier, as well as shy of the $2.3 billion in sales the company achieved then.
Those are numbers that raise the glass-half-full/half-empty question, but judging from the market's knee-jerk response -- a measurable pullback from PYPL stock -- traders are viewing the numbers in a negative light as they call into the question the heroic growth rates being touted as the reason to split the two companies (in the name of "unlocking the value" of PayPal).
PYPL Daily Chart
Looking ahead, it's a PayPal-owned service called Venmo that could make-or-break a now-shaky PYPL. The service, which transfers money from one debit account to another, was the fastest-growing of PayPal's services last quarter. But, that may have only been because there was no charge to use it. The company says it will soon begin charging its regular fees to utilize Venmo, which may well stunt that growth the same way the growth of the more common PayPal service has seemingly been stunted.
In the meantime, shares have started to recover from the immediate post-earnings stumble. But, it remains to be seen if the rally leading up to the earnings report will be fully resumed. That forward-looking P/E of 24.0 may look and feel a bit pricy to some investors for a company that may not have the growth prospects some recently assumed it had.