Why PayPal’s stock price fell again today

What happened

PayPal Credits (PYPL 2.01%) saw its stock price drop about 4.5% on Monday in early trading, falling to $70.18 per share at 10:01 a.m. ET. The stock rebounded slightly in the afternoon and was down about 3.6% as of 3:30 p.m. at around $70.76 per share.

The stock price fell after an analyst lowered its price target. PayPal remains down 62% since the start of the year.

So what

On Monday morning, analysts at Keefe, Bruyette and Woods lowered their price target on PayPal from $108 to $98, triggering the selloff. With the new price target, PayPal would still see growth from its current share price of around 38% over the next year.

It was the second analyst to make a negative call on PayPal in the past two business days, as Redburn Partners downgraded the stock on Friday. He downgraded PayPal to a neutral rating from a purchase. Redburn analyst Fahed Kunwar doubted the company could meet its revenue expectations, given that he expects e-commerce to slow in the second half of the year.

Now what

PayPal lowered its fiscal 2022 guidance in April, forecasting total payment volume (TPV) growth of 13% to 15% and revenue growth of 15% to 17%. Revenue and POS growth had been between 19% and 21% at the start of the year.

PayPal has lost a ton of value this year, with a price-to-earnings (P/E) ratio currently around 18, down from 63 as of June 30, 2021. Although PayPal’s long-term growth prospects are good, expectations of long-term e-commerce growth, proceed with caution now with PayPal until there is better visibility with the near-term economy.

Dave Kovaleski has no position in the stocks mentioned. The Motley Fool holds positions and recommends PayPal Holdings. The Motley Fool has a disclosure policy.

Karen J. Nelson