Why PayPal Stock Is Tumbling Thursday

PayPal Holdings Inc PYPL shares are trading lower Thursday after the company reported second-quarter results showing a sequential decline in active accounts. Multiple analysts lowered price targets following the print.

What Happened: PayPal said second-quarter revenue increased 7% year-over-year to $7.29 billion, which beat the consensus estimate of $6.59 billion, according to Benzinga Pro. The payments company reported quarterly earnings of $1.16 per share, which beat analyst estimates of $1.05 per share.

Total payment volumes in the second quarter increased 11% year-over-year to $376.5 billion. Operating cash flow was negative $200 million. Free cash flow came in at negative $400 million, which includes approximately a $1.2 billion negative impact from European BNPL loans expected to be sold in the second half of the year. 

Total active accounts came in at 431 million, up from 429 million year-over-year, but down from 433 million in the first quarter. 

PayPal ended the quarter with cash, equivalents, and investments of $14.4 billion. Debt totaled $10.5 billion as of June 30. 

The company said it repurchased approximately 22 million shares of its common stock during the quarter. 

"Our second quarter results show continued momentum. We have high confidence that our business is on the right path and we're seeing clear signs that the investments we've made are paying off," said Dan Schulman, president and CEO of PayPal.

PayPal anticipates third-quarter revenue of approximately $7.4 billion, vs. consensus of $7.33 billion. The company sees adjusted earnings in a range of $1.22 to $1.24 per share, compared to estimates of $1.22. 

PayPal also reiterated full-year earnings guidance of approximately $4.95 per share, compared to estimates of $4.94. 

Following the company's quarterly results, Canaccord Genuity analyst Joseph Vafi maintained PayPal with a Buy and lowered the price target from $160 to $110. Oppenheimer analyst Dominick Gabriele maintained an Outperform rating and lowered the price target from $89 to $77. Wedbush reiterated Outperform and maintained an $85 price target.

See Also: Hedge Fund Guru Bill Ackman Bets Against US Treasuries, Expects 30-Year Yields To Surge To 5.5%

PYPL Price Action: PayPal shares were down 10.4% at $65.68 at the time of writing, according to Benzinga Pro.

Photo: courtesy of PayPal.