PayPal stock tumbled despite strong earnings; know why

PayPal stock fell sharply by more than 9% on Tuesday even after the company managed to beat quarterly estimates for sales and earnings.

PayPal Holdings’ shares were trading at $81.38 per unit, down by 9.08% at 10:48 AM ET on Tuesday, as per the NASDAQ website.

This comes after the company reported its December quarter earnings and revenue on Tuesday, leaving behind the Wall Street estimates amid low expectations and key changes at subsidiary Braintree.

How PayPal performed?

The PayPal stock slipped even after the company's fiscal 2025 profit outlook for its came in above expectations. The fourth-quarter earnings were reported by the digital payments firm before the opening bell.

Exceeding expectations, the company's earnings in the fourth quarter jumped by 5% to $1.19 per share on an adjusted basis, while the total revenue increased by 4% to $8.37 billion.

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This is way above the Wall Street analysts expectations of $1.13 a share on revenue of $8.27 billion.

PayPal's take

Jamie Miller, PayPal's Chief Financial Officer, said the company was expecting “flat to low single-digit revenue growth on a currency-neutral basis,” which according to him was heavily impacted by the Braintree renegotiation efforts.

During the earnings call with analysts, Miller noted that they plan to continue guiding revenue one quarter at a time.

She added that the approach has served PayPal well during its transformation and enabled “healthy long-term decision making that prioritises driving faster transaction margin dollar growth.”

A look at financial metrics

The total payment volume (TPV) processed from merchant customers has climbed 7% to reach $437.8 billion in the fourth quarter. This remains in line with the views of analysts, who earlier predicted TPV of $438 billion.

In a report, Jefferies analyst Trevor Williams said that the "main nitpick will be branded TPV holding at 6% year-over-year as investor expectations had been for 7% to 8%."

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Key changes at Braintree

In October last year, the company's fourth quarter revenue guidance had missed estimates.

At Braintree, repricing initiatives pressured revenue growth payment volumes last year, but it improved transaction margins. Transactions for Uber Technologies, AirBnB, Spotify and others are processed by Braintree.

FAQs

1. What was PayPal's earnings in the fourth quarter?
The company's earnings were up by 5% to $1.19 per share on an adjusted basis , while its total revenue increased by 4% to $8.37 billion.

2. When did PayPal buy Braintree?
PayPal bought Braintree for $800 million in 2013.