PayPal

[tsptalk]

PayPal shares dive 25% after company blames inflation for weak guidance

Shares of PayPal fell Wednesday after the company provided weak guidance that it blamed in part on inflation.

In an interview with CNBC, PayPal CEO Dan Schulman said the company took “a measured approach” to guidance, but expects revenue to accelerate in the second half of the year.

PayPal also missed user growth targets due in part to 4.5 million “illegitimate” accounts that joined the platform.

https://www.cnbc.com/2022/02/02/pay...mpany-blames-inflation-for-weak-guidance.html

 

[Bullitt]

Another victim of their own pandemic success. With everyone using "free" money things they didn't need in 2020, there were an absurd amount of new PayPal accounts created and management thought they would grow a subscriber base like Netflix. With the benefit of hindsight, most were just one off uses. What is the point of PayPal when you can just use a credit card on most sites these days?

We are evolving our customer acquisition and engagement strategy, and we now expect to add 15 million to 20 million net new customer accounts this year. In addition, we no longer believe that the 750 million medium-term account aspiration we set last year is appropriate. I'll explain. Over the past 2 years, we've added more than 120 million customer accounts to our platform. This is, without question, remarkable growth and a complete step change from our trajectory prior to the pandemic.

Venmo was a bright spot. Maybe one day they'll spin it off.

We have over 83 million people using Venmo right now in the United States. Think about that as a percentage of the population. Yes, it's 1 like out of every 3.5 people in the U.S. is using Venmo right now.

Management hyped the addition of crypto when it was going up, but there was very little mention of it on this call.

 

[bmneveu]

Good value buy now?

 

[tsptalk]

There were a lot of folks on tv who where liking it BEFORE the 25% drop. Ouch.

But Kevin O'Leary is selling now.

Fast forward to 0:50 to hear a frustrated / funny reaction to their quarter from Kevin.

Spoiler alert: Kevin: "OK, I'm dumping it. Because they suck!"

 

[Bullitt]

I started following it a few months ago thinking the mobile payments had a good future, especially with Venmo. After this recent earnings though, it seems companies (eBay) are just going to use their own payment system. You need the physical credit card to pay on Amazon, but Venmo integration is rolling out. Apple and Google Pay have always been competitors.

The COVID stay at home plus stimulus money was a huge tailwind and is drying up.

The crypto story is a good one as long as prices are going up and crypto transactions really don't have much of an advantage over fiat, especially after costs/taxes.

Management's rosy outlook from a year ago has completely blown up. 4.5 million new accounts were disqualified after review for fraud, most likely linked to their promo to get $5 when you add the app to your phone.

With a forward PE of 25 and PE of 31, is it a value here or still a growth story even though they aren't growing customers anymore? Management will need to focus on getting current users result in more transaction volume, and that may not be easy with there now being so many options out there.

What would it take for me to get involved? I'd like to see spin-off of Venmo and crypto back in an uptrend, and more uncertainty regarding crypto regulations ironed out.