PayPal Q4 Earnings: What to Expect from This Fintech Giant?

PayPal is scheduled to report Q4 earnings this week and the event will be a key catalyst of the company’s stock price in the near term.

PayPal (NASDAQ: PYPL) is one the most prominent fintech companies globally, valued at a market cap of $192 billion. The stock went public in July 2015 and has since returned over 370% to investors in less than seven years, easily outpacing the S&P 500 Index, which has gained 141% in this period.

However, the ongoing tech sell-off has dragged PYPL stock lower by 47% from all-time highs, making the upcoming earnings all the more important. So let’s see what investors should expect from PayPal in Q4 of 2021.

When is PayPal’s Q4 earnings date?

PayPal is scheduled to report its Q4 of 2021 earnings call at 5 PM EST on February 1, 2022.

How do I listen to PayPal’s earnings call?

In case you want to listen to the Q4 earnings call or access the transcript and take a look at the company’s financial statements, investors can go to PayPal’s investor relations page.

What to expect from PayPal’s Q4 earnings?

Analysts tracking PayPal stock expect revenue of $6.86 billion and adjusted earnings per share of $1.12 in Q4 of 2021. So, while sales are forecast to increase by 12.2%, earnings are estimated to grow by 3.7% year over year in the quarter ended in December 2021.

Further, Wall Street expects sales to rise by 11.8% to $6.74 billion and earnings to decline by almost 5% to $1.16 per share in Q1 of 2022. PayPal will have to surpass consensus estimates in Q4 and provide robust guidance exceeding Wall Street expectations for the stock to regain short-term momentum. PayPal has managed to exceed consensus earnings estimates in each of the last four quarters.

PayPal is a fintech heavyweight that ended Q3 of 2021 with 416 million active accounts and $310 billion in total payment volume. The number of payment transactions per active account stood at 44.2. Its active accounts rose 15% year over year, while transactions per account grew 10%.

In the last four quarters, PayPal’s total payment volume was over $1.2 trillion, showcasing its wide economic moat and leadership in the payments vertical. The company also reported a free cash flow of $1.3 billion in Q3, accounting for 21% of total sales and an increase of 20% year over year.

PayPal also announced a partnership with Amazon in the U.S. where customers will now be able to pay with Venmo at checkout, which will be a crucial driver of payment volume growth going forward.

In the last 12-months, PayPal reported an operating margin of 18%, and it generates close to $5 billion in free cash flows annually. The ability to derive consistent profits enables PayPal to reinvest in its business and expand its suite of products and solutions, something the company has done successfully in recent years.

PYPL is expected to report sales of $29.9 billion and earnings of $5.25 per share in 2022. So, it’s valued at a forward price to 2022 sales multiple of 6.42x and a price to earnings multiple of 31x, which is not too expensive given its growth forecasts.

Analysts have a 12-month average price target of $256 for PYPL stock which is 57% above its current trading price.

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