Paypal PYPL 107.75 +1.55 +1.46% had a great quarter, beating estimates by almost 18% on the earnings side and meeting revenue estimates. Revenue grew 11.6% y-o-y. They reported $0.86 per share on revenue of $4.3 billion.
Future guidance was the problem, the company said it expects third quarter earnings of $0.69 to $0.71 per share on revenue of $4.33 billion to $4.38 billion. The current consensus earnings estimate is $0.70 per share on revenue of $4.45 billion. So miss on revenue… they also said they now expects 2019 earnings of $3.12 to $3.17 per share on revenue of $17.60 billion to $17.80 billion. The company’s previous guidance was earnings of $2.94 to $3.01 per share on revenue of $17.85 billion to $18.10 billion and the current consensus earnings estimate is $3.03 per share on revenue of $18.00 billion for the year ending December 31, 2019. Again a miss on revenue guidance even though earnings are above expectations.
Here’s the little blurb in their earnings that’s causing the problem…
eBay Marketplaces volume declined 4% on an FX-neutral basis versus growth of 6% in Q2-18, and represented 9% of TPV for the quarter versus 12% a year ago.
In my opinion… who cares? Who uses Ebay anymore?? Ebay’s revenue topped out at almost 17 billion in mid 2014, since then it has dropped considerably. After growing only 1.8% y-o-y Ebay’s revenue is currently estimated to be $10.75 to 10.83 billion. Venmo processed twice that amount in the SECOND QUARTER. Ebay phasing Paypal out is a hit, but on to bigger and better things.
In addition, PayPal extended its global partnership with Uber in the second quarter and announced plans to explore future commercial payment collaborations. PayPal also made a $500 million strategic investment in Uber.
Don’t know how I feel about an investment in Uber, or maybe I do, I wouldn’t make one. But if they’re moving toward commercial payment collaborations, it’s a win.
Regardless, Paypal is down over 4% today as the market digests the news, but they’re also up near or over 40% for the year, so if you’re a long, or even medium term holder of Paypal this is merely a flesh wound.