PayPal Holdings Inc. reported that 4.5 million accounts were closed due to 'bad actors' taking advantage of its rewards programs. The forecast for new customers was lowered in Q4 2021 earnings, which contributed to the stock's nosedive in the market.
Closing over 4 million accounts caused PayPal to miss its user growth targets. What also affected the stock is PayPal's decision to partially abandon its 5-year financial targets. PayPal's goal by 2025 is to reach 750 million users.
Instead, PayPal's focus will be on Average Revenue per User (ARPU) growth. The market did not take this well, which has led to a 25% drop in the stock. A lot of attention will be placed on the stock in today's session.
PayPal Price Targets
The news caused many analysts to re-assess their stance on PayPal. We have concentrated on some of the top views following the Q4 2021 earnings.
Credit Suisse analyst's, Timothy Chiodo reduced the stock's target to $190 from $250.
Wedbush analyst's, Moshe Katri reduced the price target to $170 from $220.
Morgan Stanley's analyst, James Faucette lowered the price target to $190 from $217.
JPMorgan analyst's, Tien-tsin Huang lowered the price target to $190 from $272.
Is PayPal a Buy?
As the stock is expected to dip lower at the opening of US markets, some may ponder whether this is a good price to buy the stock. Some market participants see it as a buying opportunity and others disagree.
PayPal is expecting inflation to affect consumer spending. The Fed is expected to hike rates in March 2022. While the hike itself may be priced-in, the rates statement may hint what will be the pace of future rates hikes.
The upcoming hike from the Fed may have a significant impact on the market. Furthermore, multiple rates hikes in 2022 may curb inflationary pressures.
