PayPal’s stock edged lower in overnight trading and is on track for an eighth consecutive session of losses, as investor anxiety deepens and Wall Street sentiment sours following the fintech company’s disappointing earnings report.
The shares plunged more than 20% on Tuesday, closing at their lowest level in nearly a decade and logging the worst single-day decline in PayPal’s history. During Wednesday’s regular session, the stock briefly fell to an intraday low of $39.96, marking a fresh 52-week low.
JPMorgan lowered the firm's price target on PayPal to $46 from $70 and maintained a ‘Neutral’ rating, according to TheFly. The firm said it believes the company's growth outlook has been "fairly reset." The results helped validate the bear thesis that PayPal will struggle to maintain its share in a competitive environment, JPMorgan said.
While Canaccord downgraded PayPal to Hold from Buy with a price target of $42, down from $100, and added that the company's e-commerce payment volume is "maturing quickly" and its next phase of growth "remains elusive.” The firm said that PayPal "really needs a next chapter and solely doubling down on eCommerce one more time seems like pouring hot water through the same coffee grounds again."
Goldman Sachs cut its price target to $41 from $64 and said the company’s acknowledgement of share losses in key markets such as Germany confirmed longstanding investor concerns. Goldman Sachs said that the valuation isn't particularly compelling relative to peers, and without clear signs of improvement in branded checkout trends, execution risks could keep shares underperforming.
Wall Street has a consensus ‘Hold’ rating on PayPal, according to Koyfin, with 31 out of the 45 analysts covering the stock rating it 'Hold' while 10 have a 'Buy' or higher rating and four rating it 'Sell.' The average price target was $53.28, implying a 30% upside from Wednesday’s closing price of $41.03.
The sharp selloff in shares followed quarterly results that fell short of Wall Street expectations and the company’s decision to name HP Inc. CEO Enrique Lores as the new CEO to fix the fintech company.
However, Wall Street analysts and corporate America executives raised concerns regarding naming a hardware company CEO to lead PayPal. Lightspark CEO David Marcus, former President of PayPal, said the new CEO has served on PayPal's board for five years. “I don’t know Enrique. And he might be a great leader, but on paper at least, he’s a hardware executive. For a payments company,” Marcus said in a post on X.
PayPal’s higher-margin branded checkout business has seen decelerating growth and it attributed the weakness to international headwinds and weakness in the U.S. retail sector, which has suffered due to pressure across its retail merchant portfolio, particularly among low- to middle-income consumers.
Retail sentiment on PayPal improved to 'extremely bullish' from ‘bearish' a month ago, with message volumes at 'extremely high' levels, according to data from Stocktwits. In the last seven hours alone, retail message volume on Stocktwits soared 40%.
A user on Stocktwits said that PayPal stock “looks like it is going to die tbh here” and could trade at a much lower price in the coming months.
Another user said that the stock was “battered” and “bruised.”
Shares of PayPal have declined 47% in the last 12 months.
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