By Dhirendra Tripathi
Investing.com – PayPal stock (NASDAQ:PYPL) plummeted nearly 17% in premarket trading Wednesday as online spending slows and the full impact of its disengagement with former parent eBay (NASDAQ:EBAY) unfolds.
The company continues to suffer from the impact of EBay transitioning to its own payments platform, a separation worked out in 2015 when PayPal was spun out of the e-commerce marketplace operator.
The split with EBay is expected to cost $600 million in revenue in the first half of this year, Reuters quoted Chief Executive Officer Dan Schulman as telling analysts in a conference call. That will slow overall revenue growth this quarter to only 6%, barely half of what analysts had forecast, and less than half the 13% growth recorded in the final quarter of last year.
Compared to 26% growth in the third quarter, total payment volume growth slipped to 23% in the fourth. The pandemic forced businesses to digitize and the acceptance of PayPal’s platform among consumers and merchants grew. That growth is now abating as consumption adjusts to normal levels, and shoppers return to physical stores.
PayPal sees itself adding just 15 million-20 million net new active accounts this year, barely a third of the 49 million it added in 2021.
The platform closed the month with 426 million active accounts. According to Bloomberg, it has abandoned its guidance of having 750 million active accounts by 2025, a decision arising out of its discovery of 4.5 million accounts created illegitimately.
Adjusted profit per share of $1.11 was higher than $1.08 a year ago but fell short of estimates.