What happened

Shares of PayPal Holding (PYPL 0.59%) slumped out of the gate on Friday, falling by as much as 7%. As of 1:33 p.m. ET, the stock was still down 5.3%.

The catalyst that sent the fintech company's shares tumbling was its third-quarter financial report. While some metrics were better than expected, management's outlook left investors wanting more.

So what

For the third quarter, PayPal reported net revenue of $6.85 billion, up 11% year over year and up 12% on a constant-currency basis. However, adjusted earnings per share declined by 2% to $1.08. To put this in context, analysts' consensus estimates had forecast revenue of $6.8 billion and earnings per share of $0.97, so PayPal cleared both bars with ease. 

Total payment volume of $337 billion was up 9% year over year and up 14% in constant currency. When the dollar is strong, foreign currencies convert into fewer dollars on financial statements, which pushes some metrics lower. Venmo's growth was also a bit slower, with total payment volume up 6% to $63.6 billion.

In the quarter, PayPal added 2.9 million new accounts, growing its total number of accounts by 4% year over year to 432 million. That growth was considerably slower than the prior-year period, when the company added 13.3 million new accounts. 

Now what

PayPal's forecast was mixed, which was another cause for concern among investors. Excluding eBay -- with which it ended a long-running partnership last year -- PayPal's full-year outlook calls for revenue growth of about 13%, down from its previous expectations for growth of 14.5%. On a more positive note, the company boosted its earnings guidance to $4.08 per share, up from $3.92 per share.

The higher profit guidance comes courtesy of cost-cutting measures announced earlier this year that appear to be bearing fruit. Management expects to achieve $900 million in annual cost savings in 2022, and anticipates that figure will climb to $1.3 billion next year.

Macroeconomic conditions and foreign currency headwinds have weighed heavily on PayPal's results. However, the company has weathered similar storms before. Furthermore, it's trading at just 2.7 times next year's sales -- its cheapest valuation ever -- making PayPal stock a buy.