American e-commerce giant company Paypal has forecasted a full-year profit above wall street estimate, amidst high inflation.
According to Paypal’s long-term forecast, the Stock price will hit $97.6 by the end of 2023. The e-commerce giant started the year at a stock price of $71.22 which is currently trading at $78.42, marking a 10% increase from the beginning of the year.
Despite macroeconomic pressure that is hurting the purchasing power of American consumers, reports reveal that PayPal’s customers continue to spend large, undeterred by the high inflation rate.
PayPal’s acting finance Chief Gabrielle Rabinovitch however acknowledged that the rate of e-commerce growth has decreased, because inflationary spending has affected consumers’ spending, however noting that spending partners are still evolving.
Despite the high inflation taking a toll on consumers purchasing power, Investors King understands that PayPal forecasted a full-year profit due to the fact its Buy Now, Pay Later (BNPL) payment offering has been a favorite go-to solution for customers in this uncertain economy.
During an earnings call with analysts last year, Pay Pal CEO Dan Schulman noted that 25 million consumers are now using its BNPL option, equating to 150 million different loans at over 2.2 million unique merchants.
Schulman further stated that PayPal is seeing a halo spend of greater than 20% and 90%. Addressing the question of rising BNPL delinquencies amid surging inflation, he stated that the loss rates remained low and stable.
In his words
“The size of our active account base and the years of transaction data we have on our customers provide us with an additional competitive advantage from an underwriting perspective. As of the end of Q3 2022, our loss rates remain among the lowest in the industry with no observable deterioration to date.”
Meanwhile, PayPal has disclosed that it will not provide a forecast for the full-year 2023 revenue growth, which analyst D.A Davidson predicts could be a result of the macro uncertainty.