All eyes on PayPal Q1 results amid restructuring, competition woes
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PayPal (NASDAQ:PYPL) is scheduled to announce Q1 earnings results on Wednesday, April 27th, after market close.
The consensus EPS Estimate is $0.88 (-27.9% Y/Y) and the consensus Revenue Estimate is $6.41B (+6.3% Y/Y).
Over the last 2 years, PYPL has beaten EPS estimates 75% of the time and has beaten revenue estimates 63% of the time.
Over the last 3 months, EPS estimates have seen 1 upward revision and 29 downward. Revenue estimates have seen 1 upward revision and 25 downward.
Baird noted a consensus earnings estimate of $0.89 per share on revenue of $6.40B. The firm said investor sentiment going into the company's earnings release has 54% expecting an earnings beat.
Baird added that it has been cautious on the near-term set-up for shares and have highlighted that the 2022 guidance likely does not factor in a worsening macro backdrop.
The firm still sees potential for a more favorable set-up into 2H-22 as comps ease and if the macro-outlook clears up a bit.
On Feb. 1 the company reported its Q4 results and provided Q1 guidance, expecting Q1 adjusted EPS of ~$0.87 and revenue to increase ~6% on a spot basis, with revenue, excluding eBay, to rise ~14%.
Baird noted that the short interest has increased by 15.5% since the company's last earnings release while the stock has drifted lower by 38.5% from its open following the earnings release to be 57.2% below its 200 day moving average of $201.08.
PayPal's stock had declined -24.59% on Feb. 2, the day after it reported its Q4 results on Feb. 1 post-market. The company beat revenue estimates but missed on Non-GAAP EPS.
The chart below shows 6-month price return performance of PYPL and peers Block, Fiserv and Global Payments:

Earlier in April, Oppenheimer noted that Amazon's move to roll out a "Buy with Prime" button on third-party websites is likely to directly compete with PayPal (NASDAQ:PYPL) for smaller merchants.
Truist had echoed similar concerns. Truist analyst Andrew Jeffrey cut the price target for PayPal (PYPL) to $115 from $130 as he thought the fintech payment company is losing market share from new "buy buttons."
The company has been amid an internal restructuring for cutting spending. PayPal laid off its research team specializing in emerging technologies widely considered as fast-growing areas. Meanwhile, CFO John Rainey is also leaving the company at the end of May to join Walmart as CFO.
Mizuho Securities had said, "PayPal's CFO departure is not surprising following a period of overpromising and under-delivering, and given the stock's 65% decline from the peak."
PayPal (PYPL) President and CEO Dan Schulman had received $32.07M in total compensation in 2021, up from the $23.36M he received in 2020.
In March, Bank of America Securities analyst Jason Kupferberg downgraded PayPal (PYPL) to Neutral from Buy on the back of the company embarking on a strategic pivot and working on newer growth initiatives while facing macro headwinds related to Russia/Ukraine.
PayPal (PYPL) stopped accepting new users in Russia, while at the same time enabled users to send money to residents in Ukraine, as well as those now refugees across Europe amid Russia's invasion of the country.
In February, PayPal (PYPL) formed an advisory council to support digital asset-related products and create a digital financial system. In March, PayPal (PYPL) and Venmo raised fees on cryptocurrency trades of up to $200.