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PayPal Earnings Due As Elliot Management Stake, U.S. Recession Loom

When PayPal Holdings (PYPL) reports earnings, management’s view on the U.S. economy and e-commerce growth looms key for PYPL stock. Also, analysts expect commentary on activist investor Elliott Management’s stake in the company.

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June-quarter earnings for PayPal stock are due late Tuesday. Analysts expect earnings to fall 24% to 87 cents a share, with revenue rising 8% to $6.77 billion.

As e-commerce boomed during the coronavirus, shares in PayPal soared. But PayPal stock has retreated 53% in 2022.

PYPL stock slipped 0.8% to 87.88 on the stock market today.

PYPL Stock: Outlook For U.S. Economy

“We think investors probably won’t turn positive on PYPL stock until they have confidence that e-commerce growth can normalize to a pre-Covid rate of expansion,” Morgan Stanley analyst James Faucette said in a note to clients.

PayPal in May lowered its 2022 revenue growth guidance to a range of 11% to 13% vs. earlier predictions of 15% to 17%. It remains to be seen if it sticks with that outlook amid worries the U.S. economy will fall into a recession. The Federal Reserve has hiked interest rates.

Meanwhile, Elliott Management has reportedly taken a stake in San Jose, Calif.-based PayPal.

“Regarding suggestions of Elliot activist engagement, we have our own ideas and are interested to see theirs (PayPal Management’s)” said Susquehanna analyst James Friedman in a report.

Call For Pinterest Merger?

CFRA Research has speculated that the hedge fund could push PayPal to revive merger talks with Pinterest (PINS).

Heading into the PayPal earnings report, PYPL stock holds a Relative Strength Rating of 13 out of a best possible 99, according to IBD Stock Check-up.

If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns for issues such as PYPL stock is one key to the investment guidelines.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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