PayPal Earnings Beat. Here's Why The Stock Is Tumbling

 PayPal Holdings (PYPL) on Tuesday reported December quarter earnings and revenue that topped Wall Street estimates amid lowered expectations and changes at subsidiary Braintree. The company's fiscal 2025 profit outlook for PayPal stock came in above expectations. But PayPal stock tumbled.

The digital payments firm reported fourth-quarter earnings before the market open.

PayPal earnings for the fourth quarter rose 5% to $1.19 per share on an adjusted basis. Revenue climbed 4% to $8.37 billion.

Analysts expected PayPal earnings of $1.13 a share on revenue of $8.27 billion.

On the PayPal earnings call with Wall Street analysts, Chief Financial Officer Jamie Miller said: "For the first quarter, we expect flat to low single-digit revenue growth on a currency-neutral basis, which is heavily impacted by the Braintree renegotiation efforts."

She added: "We plan to continue guiding revenue one quarter at a time. We believe this approach has served the company well during our transformation – enabling healthy long-term decision making that prioritizes driving faster transaction margin dollar growth. Over time, we are focused on accelerating both revenue and profitability."

PayPal Stock: Key Financial Metrics

In Q4, total payment volume (TPV) processed from merchant customers in the quarter climbed 7% to $437.8 billion, in line with views. Analysts had projected total payment volume of $438 billion.

At Jefferies, analyst Trevor Williams said in a report: "Main nitpick will be branded TPV holding at 6% year-over-year as investor expectations had been for 7% to 8%."

TD Cowen analyst Bryan Bergin holds a similar view. "Branded growth remaining at 6% (flat versus Q3) apt to be sticking point on share loss concerns," he said in a report.

Branded TPV is tied to the online PayPal check-out button that many consumers use when shopping.

Another key financial metric, transaction margin dollars, rose 7% to $3.9 billion. That topped estimates of $3.77 billion.

But operating expenses of $6.93 billion topped at least some forecasts.

For full-year 2025, PayPal predicted adjusted earnings in a range of $4.95 per share to $5.10 per share versus estimates of $4.91 per share.

The company forecast 2025 transaction margin dollars in a range of $15.2 billion to $15.4 billion, above estimates of $15.05 billion.

Changes At Braintree

In October, PayPal's fourth quarter revenue guidance missed estimates.

Repricing initiatives last year at subsidiary Braintree have pressured revenue growth payment volumes but improved transaction margins. Braintree processes transactions for Uber Technologies (UBER), AirBnB (ABNB), Doordash (DASH), Spotify (SPOT), Paymentus and others.

Meanwhile, Braintree's payment volume and revenue could be lower if some customers migrate business to other payment firms when contracts come up for renewal.

Also, worries over lost checkout market share to Apple (AAPL)and others continue to be a concern for PayPal stock.

PayPal Stock Technical Ratings

On the stock market today, PayPal stock fell 6% to 84.13 in early trading, signaling a move below the 50-day line and near the bottom of a flat base. PYPL stock has a 93.66 traditional buy point.

Heading into the PayPal earnings report, shares were up 4% in 2024. PayPal stock had advanced 42% over the past year.

In addition, PayPal hosts an investor day on Feb. 25. When reporting Q4 earnings, the company also announced a new $15 billion share buyback program. It had over $5 billion remaining from a buyback program announced in 2022.

San Jose, Calif.-based PayPal has evolved from an online checkout option to a mobile shopping and person-to-person payments app.