The international market pressure on earnings outlook
PayPal Holdings, Inc. (PYPL) is to release its earnings report for the second quarter ending Jun 2022 on Tuesday, 2 August. According to Zacks Investment Research, based on 15 analysts' forecasts, the consensus EPS forecast for this quarter is $0.54, down from the $0.88 EPS reported for the same quarter last year. In the past four quarters, PayPal missed expectations twice.
The electronic commerce company that started payment processors for online vendors, auction sites, and many other commercial users in 1998 as a Confinity and in 2022 went public through an IPO. Before becoming an independent company again in 2015, just a few months after its establishment, it became a wholly owned subsidiary of eBay. On top of online payments, PayPal also offers various related financial services, including debit cards for payments, credit card readers for small merchants, and lines of credit.
Since the main focus is a money transfer and, lately, credit cards with cashback options, we should watch the company's Total payment volume (TPV), Active customers, Payment per active customer, and Active accounts. Consensus estimates are for 433M active accounts, which shows a 7.4% annual raise. These active clients are generally expected to have 5.5 billion transactions which shows 10.9% raise from the same quarter the year ago. The TPV estimates also are $345.01 billion, meaning a growth of 10.9% annually.
Oppenheimer estimates for PayPal's Q2 2022 earnings are $0.50 EPS, FY2022 earnings are $2.48 EPS and a $101.00 price target on the stock.
While Paypal expecting to get more interested with its PayPal Cashback credit card, which offers unlimited 3% cash back, and PayPal Business Cashback Mastercard, which offers 2% cashback on all purchases, most of these services are for the US market, and that is why for overall income, the company's weakness in the international market is expected to have been a significant headwind.
From the technical point of view, it seems like the company's downtrend is ended at $72, and in the short term, we can see a recovery, especially if the earnings can beat expectations. However, in the bigger picture, $115 is the primary resistance, and as long as it is trading under this level, we can not count on its bulls.
