The market has turned against PayPal (NASDAQ:PYPL), but that’s not a bad thing. A temporary shift in sentiment shouldn’t change your PYPL stock outlook. Indeed, the stock’s recent drop presents an opportunity to buy cheaper shares of a payments processor with Street-beating results.
PayPal is in a transitional phase in 2024. CEO Alex Chriss has a turnaround plan in place that includes laying off 9% of PayPal’s staff.
Yet, some PayPal stock traders aren’t being patient and seem to expect too much of the company. However, if some haters and naysayers want you to sell your PayPal shares, that’s only a sign that it’s time to buy more.
PayPal’s Solid Results
The critics can complain all day long, but they can’t argue with PayPal’s fourth-quarter 2023 financial results. First of all, PayPal generated net revenue of $8 billion, up 9% year over year and ahead of the analysts’ consensus estimate of $7.88 billion.
Meanwhile, PayPal reported GAAP-measured earnings of $1.29 per share, demonstrating vast improvement over the $0.81 recorded in the year-earlier period. Furthermore, this result beat the $1.18 per share that Wall Street was looking for.
Just as importantly, Chriss seems ready to follow through on his turnaround plan. The CEO assured that PayPal is “committed to making the necessary changes to our business to drive profitable growth in the years ahead.” Chriss called 2024 a “year focused on execution to position PayPal for long-term success.”
Why Did PYPL Stock Drop?
Despite the aforementioned Street beats, PYPL stock fell 11% after the company’s quarterly data release. So, why was the market willing to ignore PayPal’s solid results?
Apparently, PayPal’s forward guidance wasn’t optimistic enough for some stock traders. The company expects to earn $5.10 per share an a non-GAAP basis, which would be a flat result (neither growing nor declining) YOY.
So, investors objected to the idea that PayPal expected flat YOY earnings. Yet, as Bloomberg pointed out, this is part of PayPal’s effort to “cut costs and streamline its operations.” Transitions aren’t easy, and they can involve short-term pain for long-term gains.
The problem is that the market wants nothing less than a blockbuster beat-and-raise right now. Waiting patiently for PayPal to execute its turnaround plan isn’t an acceptable scenario for some investors.
That’s a shortsighted mindset, and if you can see the big picture for PayPal, you can take advantage of selloffs instead of giving in to the FUD (fear, uncertainty and doubt).
PYPL Stock Outlook: Thank the Haters for This Opportunity
It’s unreasonable to expect PayPal to deliver a bumper crop of profits in a transitional year. Besides, it’s not as if PayPal is a failing business. The company’s fourth-quarter 2023 results provided compelling evidence that PayPal can grow its revenue.
Therefore, I encourage you not to hate the PayPal haters. Instead, just ignore them and understand that the PYPL stock outlook calls for higher prices in 2024. Better yet, show gratitude and thank the haters for the chance to buy PayPal shares at such an excellent price.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
