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PayPal Stock Price Is Under Pressure; Upside is Limited

PayPal Stock Price Is Under Pressure; Upside is Limited
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After rallying significantly during the first half, PayPal (NASDAQ: PYPL) stock price slid sharply in the last two months. The stock is down more than 12% from 52 weeks high of $122. The stock is currently hovering close to $100, up 19% year to date.

Traders’ concerns over declining revenue support the bearish trend in PayPal stock price. The company has reduced its outlook for the full year. Market analysts have also lowered the ratings and price targets.

Analysts are Bearish Amid Headwinds

Market analysts have dropped their ratings for this company following the second-quarter results.

Guggenheim has downgraded its stock rating from Neutral to sell. The firm claims numerous headwinds for the next couple of quarters including eBay separation, regulatory changes in Europe and Brexit.

Guggenheim also sees a deceleration in revenue growth next year along with the departures of key executives for PYPL as negatives.

Lower Outlook Is Impacting Stock Performance

The company has missed the consensus estimate for the second quarter. Its revenue of $4.31 billion in the second quarter missed estimate by $20 million. In addition, the company has reduced its revenue outlook for the following quarters.

PayPal expects Q3 revenue to stand in the range of $4.33B-$4.38B. This is down from the $4.45B consensus estimate. The adjusted EPS guidance for 69 cents-71 cents remains in line with the average analyst estimate of 69 cents.

It anticipates FY2019 revenue of around$17.6B-$17.8B compared to earlier guidance for $17.85B-$18.10B. The fiscal year 2019 consensus revenue estimate is $17.98B.

The Dip is Not a Buying Opportunity

The dip in PayPal stock price is not a buying opportunity. Indeed, analysts and traders are expecting further downtrend in the coming days with limited upside potential. Lower than expected revenue growth along with concerns over macro headwinds could keep its share price under pressure. Therefore, waiting for a better entry point appears like a good strategy.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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siraj sarwar

Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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