PayPal Stock: Should You Buy the Current Dip?

Fintech leader (NASDAQ: PYPL) delivered a solid earnings report on May 9 for the first quarter (ended March 31), with revenue and earnings surpassing consensus estimates. The company is also guiding for adjusted earnings per share (EPS) of $4.95 for fiscal 2023, implying a year-over-year upside of 20%, higher than the prior growth outlook of around 18%.

Yet, shares of the payment network specialist are down by over 40% from its 52-week highs. Wall Street is mainly concerned about the slow pace of year-over-year expansion in adjusted operating margins (100 basis points expected, as compared to the previous estimate of 125 basis points) and a 2 million sequential decline in the number of active accounts in the first quarter. The stock is pressured by a slowdown in the higher-margin branded checkout business (its legacy business that enables merchants to process transactions through PayPal's payment network and includes PayPal's checkout button), intensifying competition from other digital wallets, and currency fluctuations.

However, despite the headwinds, the company's long-term growth story remains intact. With shares trading at multi-year low price levels, patient investors stand to reap huge financial rewards in the long run.

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Source Fool.com