Earnings season isn’t kind to everyone, and even before PayPal’s (NASDAQ:PYPL) earnings, investors were expecting the worst. As expected, the company couldn’t manage to impress, and the disappointing sentiment continued. In fact, PYPL stock hit its 52-week low on the morning of May 6.
In my previous coverage of the stock, I mentioned that the company has the potential to bounce back but that it would take time, and I still stand by that. The business is interesting and is attracting users, but we might not see a rebound in PYPL stock anytime soon.
PayPal stock stock is down 57% in the year and 31% in the past month. It has gone from $115 to under $81 in a month, and I believe the downward journey will continue until the stock hits rock bottom. If you are planning to take your position in the stock, wait for it to hit a new low. Besides the quarterly results, the market conditions are not in favor of the company, and it will continue to impact the stock in the short term.
The latest guidance by the company shows that the management has cut down its revenue growth from 17% to 13%, and this wasn’t taken positively by investors since it is a huge margin. A company will only take this step when it is certain that meeting the original guidance does not look possible.
The company could also face challenges due to the economic slowdown. No matter how it handles the business, some things continue to remain out of control. In fact, inflation and supply chain issues in the U.S. have also hampered the growth of the company since the start of the year.
Based on the longer-term outlook, PayPal is a solid business, and it has not run its course yet. However, PYPL stock is not at the bottom and the worst isn’t over for the company. Wait for another dip before buying the stock.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.