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Author: Alan LittleDate: 2020-11-04

PayPal (PYPL) trades 4% lower on cautious Q4 guidance

PayPal (PYPL) shares were down 4% during Tuesday’s trading even though the online payments group posted a strong Q3 report, as conservative guidance for the current quarter dominated the narrative for wary investors.

Before the first bell, PayPal came in with $1.07 earnings per share and $5.46bn revenue for the three months to 30th September.

Those figures represented a 75% and 25% spike respectively from a year ago and were also well ahead of the Wall Street consensus.

PayPal benefited from the ongoing surge in digital payments as it processed almost $250bn in transactions during the latest period, which is a 36% increase year over year.

However, a modest forecast for Q4 clouded many of the positives in the rest of the report, with PayPal expecting profits and revenue to rise by up to 18% and 25% respectively.

Investors were expecting more, but CEO Dan Schulman said that the company is performing well amid the challenges of the pandemic and on the eve of an incredibly important election.

JMP Securities analyst David Scharf said that the “near-term conservatism” had taken the shine off a robust Q320 report.

He noted that greater investment in new product launches, a slower rebound in travel and entertainment industries, and a “significant eBay de-conversion headwind” had prompted management to be more cautious.

PayPal shares went into negative territory after markets opened on Tuesday.

PYPL was trading 3.06% lower at just after 10am ET on the Nasdaq for a new $181.37 share price.

That retreat does shave PayPal’s gain this year, though it remains up around 40% for the last six months.

PayPal currently has an analyst consensus at buy, with 34 buy, seven hold and one sell ratings.

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