PayPal (NASDAQ:PYPL) shares nosedived 18% in after-hours dealing in the United States as financials missed analyst expectations and the outlook was downgraded.
Fourth-quarter earnings per share came in at US$1.11, US$0.01 short of estimates.
Revenue, meanwhile, was US$6.9bn compared to US$6.86bn.
eBay put US$1.4bn of revenue pressure on PayPal last year but anticipates this to be roughly US$600mln this year, while it expects not to have to adjust results for eBay by the third quarter.
“We’ve got the eBay transition to work our way through. This transition is hiding some of the underlying strength of the business,” Schulman said.
eBay bought PayPal in 2002, but in 2015 the two giants went separate ways with eBay slowly transitioning to its own payment system ever since, CNBC said.
The payments processor says its future revenue strategy will focus on sustainable growth rather than a temporary push to accumulate new users, which is reflected in significantly lower targets for user growth this year.
The online payment group aims to gain 15mln-20mln new members in 2022, which is a severely reduced target compared to PayPal’s goal of reaching a total of 750mln accounts in 2021 – after the actual tally of user accounts stood at 426mln by year-end after 9.8mln were added in 2021.
“Moving forward, we will continue to grow our users, but our focus will be on sustainable growth and driving engagement,” said John Rainey, Paypal chief financial officer.
“To be very clear, this is a choice on our part.
“We could increase our spin and accelerate our net new active trajectory. However, we believe there are better ways to achieve our financial results,” he added.
Chief executive Dan Schulman blamed external factors for last year’s growth struggle.
Schulman pointed to soaring inflation, limited customer spending, and supply chain problems which he says disproportionately impacted overseas payments, particularly from China.
Schulman expects sales to pick up in the second half of 2022.
"PayPal’s shares slumped 17.9% in after-hours trading on Nasdaq after flagging a further slowdown in spending on its platform," Russ Mould, AJ Bell investment director, said.