PayPal Q2 Earnings: It’s Not Just The Decline In Accounts

Summary:

  • PayPal Holdings, Inc. reported Q2 adjusted earnings per share of $1.16 (+24% YoY) and revenue of $7.3 billion (+7% YoY) – so why the precipitous drop?
  • The company reported declining active accounts for the second time. I explain why the (small) decline is not that alarming, and why investors should instead keep an eye on margins.
  • I continue to avoid PayPal stock, despite the (seemingly) cheap valuation, largely due to the questionable moat of this payment services provider.
  • Management’s earnings adjustment policy is another reason why I would not risk capital here.

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Introduction

I first covered PayPal Holdings, Inc. (NASDAQ:PYPL) stock in October 2022. At that time, I rated it a “Sell,” even though it had already declined more than 70% from its all-time high. Recency bias can be


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