Therefore, it's sensible for PayPal CEO Dan Schulman to await the appointment of Rainey's permanent successor before committing to a revised outlook. Furthermore, PayPal CFO John Rainey will depart for Walmart ( WMT) soon. Coupled with the ongoing Russia-Ukraine conflict that exacerbated inflation impacting consumer discretionary spending, pulling its outlook makes a lot of sense. It highlighted that the macroeconomic environment has worsened, and e-commerce spending has decelerated dramatically. Management requires a reset in its model that was presented in February 2021. PayPal consensus estimates (by FQ) % (S&P Capital IQ)Įven though PayPal decided to pull its medium-term forecast while revising its Q2 guide, we weren't surprised. PayPal consensus estimates (by FY) % (S&P Capital IQ)

Therefore, we reiterate our Buy rating on PYPL stock.

However, it could get re-rated as it exits Q4'22 when the comps are expected to become more manageable. Still, we believe PYPL stock should remain in the penalty box through H2'22. However, we think the risk/reward proposition for PYPL stock looks reasonable moving ahead. We can't tell you whether PYPL force will eventually break the COVID bottom and force a bear trap before reversing. Therefore, despite what seemed like hugely disappointing guidance in the near- and medium-term, PYPL stock remained steadfast last week. In a pre-earnings article, we highlighted that the market would 'force' the COVID bottom.

Yet, the stock didn't break convincingly below its COVID bottom, as dip buyers returned to defend PYPL stock. However, management downgraded Q2's guidance and pulled its medium-term outlook. Hence, the beat wasn't surprising but was still welcomed by investors. But, it was a hugely downbeat metric, to begin with. ( NASDAQ: PYPL) reported a rather underwhelming Q1 card that beat the consensus estimates on revenue. Justin Sullivan/Getty Images News Investment Thesis

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