PayPal downgraded to Neutral at Susquehanna on Braintree's share of mix
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PayPal Holdings (NASDAQ:PYPL) stock has slipped 2.4% in Tuesday premarket trading after Susquehanna analyst Jamie Friedman downgraded the payment technology stock to Neutral as its Braintree unit gains share within PayPal's total payment volume, resulting in negative leverage. 
"Piecing together intermittent disclosures, we estimate that Braintree accounted for 31% of PYPL's TPV in 2021 and may reach 44% by 2023, contributing roughly 72% of PYPL's overall volume growth next year," Friedman wrote in a note to clients.
With Braintree accounting for such a large proportion of PayPal's (PYPL) volume, its unit economics are likely to create a drag on the overall company's consolidated results, the analyst said.
Recall that in 2013, PayPal (PYPL), then a part of eBay (EBAY), acquired Braintree, which developed the Venmo P2P mobile payments app, for $800M.
"Consensus may underestimate the yield and transaction expense pressure which PYPL may experience, Friedman said.
The Neutral rating aligns with the SA Quant rating of Hold and diverges from the average Wall Street rating of Buy.
Just last week, Raymond James upgraded PayPal (PYPL) to Outperform due to increased confidence in the company's H2 top-line results. SA contributor JR Research, though, pivoted to Hold from Buy on the stock earlier this month.