PayPal’s stock price experienced a decline on Tuesday morning following the release of its Q4 2024 earnings report. While revenue and net income surpassed analyst expectations, the company’s adjusted earnings fell short of projections, leading to a negative market reaction. This report delves into the key financial figures and the announced stock buyback program.
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While adjusted earnings per share for both Q1 2025 and the full year 2025 also missed estimates, the company’s revenue and net income did beat expectations. Adding to the mix, PayPal announced a substantial new stock buyback program. Let’s explore the details.
Q4 2024 Performance: A Mixed Bag
For the fourth quarter of 2024, PayPal reported revenue of $8.37 billion, marking a 4% year-over-year increase. This figure exceeded the analyst consensus of $8.26 billion, as reported by Visible Alpha. Net income reached $1.12 billion, translating to $1.11 per share. Although this represents a 20% decline compared to the same period last year, it still managed to slightly outperform analyst expectations of $1.08 billion and $1.06 per share, respectively. However, the crucial metric of adjusted earnings came in at $1.21 billion, falling below the consensus estimate of $1.44 billion.
2025 Projections: EPS vs. Adjusted EPS
The disparity between reported and adjusted earnings continued into PayPal’s projections for 2025. While the company’s earnings per share outlook surpassed analyst estimates, the adjusted earnings per share projections fell significantly short.
PayPal anticipates earnings per share in the range of $1.11 to $1.13 for the first quarter of 2025 and $4.80 to $4.95 for the full year. These figures are higher than analyst predictions of $1.07 for Q1 and $4.67 for the full year. However, the adjusted earnings per share projections paint a different picture. PayPal expects adjusted earnings per share between $1.15 and $1.17 for Q1 2025, and between $4.95 and $5.10 for the full year. These numbers are considerably lower than the analyst consensus of $1.36 and $5.83 per share, respectively.
$15 Billion Stock Buyback Program
In a significant move, PayPal’s board of directors authorized a new $15 billion stock buyback program. This comes in addition to the remaining $4.86 billion allocated under the previous buyback program initiated in the second quarter of 2022.
Market Reaction and Long-Term Performance
Despite the positive news regarding revenue and the substantial buyback program, the miss on adjusted earnings weighed heavily on investor sentiment. PayPal’s stock price dropped over 9% on Tuesday morning. However, it’s important to consider the broader context: the stock has still gained approximately 30% over the past 12 months.
Conclusion: Navigating the Complexities of PayPal’s Earnings
PayPal’s Q4 2024 earnings report presented a complex picture for investors. While the company demonstrated strong revenue growth and announced a significant stock buyback initiative, the lower-than-expected adjusted earnings triggered a negative market response. This underscores the importance of analyzing various financial metrics and considering both short-term fluctuations and long-term trends when evaluating investment opportunities.
