PayPal Makes Sharp Cuts to its Guidance for 2022

PayPal said that supply chain disruptions affecting e-commerce sales and the normalization of in-store and virtual spending combinations have made business predictions difficult. Therefore, the company has significantly lowered its 2022 forecast. This includes net sales growth about 4 percentage points slower than previously expected and is now around 11% to 13%. 

The good news for equities is that expectations have already dropped significantly since the company announced its strategic pivot earlier this year. Reset guidance could actually be a gateway for some investors to return to stocks.

Along with many fintech, PayPal's share price fell 56% in 2022 by Wednesday's closing price. With new, lower guidance on adjusted earnings per share in 2022, PayPal is currently trading at about 22x futures earnings after a stock price rise of more than 3%.

In addition to increasing payments, the pandemic may have spurred an increase in the number of PayPal accounts. After adding more than 120 million new net active accounts in 2020 and 2021, PayPal now forecasts about 10 million in 2022. This is half the upper limit of previous guidance for the year, adding about a quarter of  2019.