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PayPal stock pandemic boom fades ahead of earnings

Yahoo Finance's Ines Ferre joins the Live show to break down how stocks are moving in early trading.

Video Transcript

JULIE HYMAN: Well, we-- in terms of other earnings reports that we are watching and watching for, PayPal is due out after the close of trading. This, by the way, follows on another big payment company, Visa, that was out before the open today and is seeing a big boost in its shares. PayPal shares have been falling, but they're up a little bit this morning. Ines Ferre is looking ahead to those PayPal numbers.

Man, Paypal's been a bit of a stinker, Ines. What are people looking for with the numbers?

INES FERRE: It sure has, Julie. And right now, we are seeing that PayPal is actually up more than 2% today. But it just did hit 52-week lows yesterday. So investors will be looking at $0.88 a share for the bottom line and more than $6 billion for revenue. But keep in mind that this stock has been really underperforming.

I'm going to pull up here a year-to-date chart so you can see. It's down 54% year-to-date. Now, the stock really plummeted right around here in February, after they announced their fourth-quarter results, with PayPal talking about user-spending growth slowing on the platform, bringing up the topic of inflation, of consumer spending, and, really, that having an effect on the lower-income cohorts.

Also, the company talking about a new strategy to focus more on user engagement rather than user growth to drive revenue. So this really spooked investors. Also want to note that recently PayPal announced that its CFO John Rainey will be leaving the company to go to Walmart. And when that announcement was made, Wall Street analysts noted that the company did not reiterate its outlook when it made that announcement.

Now, keep in mind, this has been a pandemic darling. I'm going to pull up here a two-year chart here. Right around in July of 2021, it hit new highs. And look, people ordering-- making payments online-- the online boom during the pandemic was huge for PayPal. As that has been waning, that has been affecting this stock. But as a Citigroup analyst noted, e-commerce, online payments, that is not going anywhere.

And so perhaps these valuations start to look attractive at some point. Citigroup recently reiterated its buy rating, but it did lower its price target, at $140 a share. Guys.