PayPal Holdings Inc (PYPL.O) shares fell 5% in extended trading on Monday after the payments giant trimmed its year-adjusted operating margin expectation, overshadowing its profit prediction increase.
PayPal predicts a 100-basis-point adjusted operating margin increase this year, down from 125.
Dan Dolev, the Mizuho analyst, told Reuters that PayPal shares dropped because investors believe the company’s branded checkout button, a high-margin business, isn’t performing as well as expected and that they’re losing market share to Apple.
Analysts say high-interest rates discourage expensive purchases since buyers, especially lower-income ones, are in debt.
Payments volume on a forex-neutral basis was $354.5 billion in the first quarter that ended March 31, down from $357.4 billion in the fourth quarter. The payments firm’s executives warned that inflation was affecting discretionary consumer spending.
E-commerce trends and cost cutbacks helped the payments giant lift its full-year adjusted profit projection.
It forecasts adjusted earnings growth of 20% to $4.95 per share, above analysts’ average expectation of $4.88.
First-quarter adjusted operating profit was 22.7%, up from 20.7% last year. PayPal’s first-quarter revenue was $7.04 billion, up 10% forex-neutral.
The payments firm’s adjusted quarterly earnings were $1.17 per share, up from 88 cents last year. However, PayPal’s growth slowed last year as governments relaxed restrictions and macroeconomic conditions worsened.