What Happened
PayPal Holdings (PYPL -0.05%) saw its stock price plummet about 4.5% on Monday in early trading, dropping to $70.18 per share as of 10:01 a.m. ET. The stock rallied back a bit in the afternoon and was down around 3.6% as of 3:30 p.m. at around $70.76 per share.
The stock price dropped after an analyst lowered its price target. PayPal remains down 62% year to date.
So what
On Monday morning, analysts at Keefe, Bruyette, & Woods lowered their price target on PayPal from $108 to $98, sparking the sell-off. With the new price target, PayPal would still see growth from its current share price of about 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. It lowered PayPal to a neutral rating from a buy. Redburn analyst Fahed Kunwar was doubtful that the company could meet its revenue expectations, given that he expects a slowdown in e-commerce over the second half of the year.
Now what
PayPal lowered its guidance for fiscal 2022 in April, calling for total payment volume (TPV) growth of 13% to 15% and revenue growth of 15% to 17%. Revenue and TPV growth had both been in the 19% to 21% range at the start of the year.
PayPal has lost a ton of value this year, with a price-to-earnings (P/E) ratio currently at around 18, down from 63 on June 30, 2021. While PayPal's long-term growth prospects are good, considering long-term e-commerce growth expectations, proceed cautiously now with PayPal until there's better visibility with the economy in the near term.
