Nov 3 (Reuters) – Online payments firm PayPal Holdings Inc (PYPL.O) cut its annual revenue growth forecast in anticipation of a broader economic downturn and said it did not expect much growth in its US e-commerce business in the holiday quarter.
Shares in PayPal, owner of the popular Venmo payments app, fell as much as 11% in extended trading on Thursday after the company also reported a decline in third-quarter profit, but they later pared some losses and were down at 9%.
The San Jose, California-based company cut its adjusted growth outlook for the year to 10% from 11% previously. Analysts were expecting 10% growth, according to Refinitiv.
As inflation soars to the highest in decades and worries of a potential recession escalate, companies are issuing conservative forecasts to reflect an expected tightening in consumer spending.
Chief Executive Daniel Schulman blamed “a challenging macro environment, slowing e-commerce trends and an unpredictable holiday shopping season” for the company’s prudent forecast.
“We think that e-commerce is going to be pretty muted in the fourth quarter,” Schulman said in a post-earnings call.
Last week, payments giant Mastercard Inc (MA.N) also forecast weaker-than-expected revenue growth for the holiday quarter. read more
But Block Inc (SQ.N), a payments platform led by Twitter founder Jack Dorsey, posted a rise in quarterly revenue on Thursday on the back of a strong online payments business, sending its shares up 14%.
PayPal posted a lower adjusted profit of $1.08 per share for July-September. Analysts had expected a profit of 96 cents a share.
The company said it expects $900 million in cost savings this year and at least $1.3 billion next year.
“Their cost saving plans are taking hold but in the ultra-competitive payments world, market share gains don’t seem to be enough to place investors,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
Reporting by Mehnaz Yasmin in Bengaluru; Editing by Shinjini Ganguli and Sayantani Ghosh
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