PayPal Holdings, Inc. Stock Drops Despite Strong Q1 Earnings
Shares of PayPal Holdings, Inc. (NASDAQ: PYPL) fell sharply by more than 10% at Tuesday’s market open, even though the company reported first-quarter results that exceeded analyst expectations on both revenue and earnings.
Earnings Beat Expectations Across Key Metrics
PayPal reported adjusted earnings per share (EPS) of $1.34, surpassing the consensus estimate of $1.27 by $0.07. Revenue rose 7% year-over-year to $8.4 billion, coming in above the projected $8.05 billion. On a currency-neutral basis, revenue growth stood at 5%.
The company also delivered strong operational performance. Total payment volume increased by 11% to $464.0 billion, or 8% when adjusted for currency effects. Meanwhile, payment transactions grew 7%, reaching 6.5 billion.
CEO Signals Focus on Growth and Efficiency
CEO Enrique Lores expressed optimism about the company’s future direction, emphasizing a renewed focus on execution and strategic alignment.
“I’m energized by the opportunity to improve execution and accelerate PayPal’s growth,” he said. “We are taking deliberate steps to refine our strategy, streamline operations, and optimize both growth and cost efficiency by prioritizing high-impact investments.”
Mixed Outlook Weighs on Investor Sentiment
Looking ahead, PayPal expects a high single-digit decline in adjusted EPS for the second quarter, roughly around -9%. The company maintained its full-year guidance, projecting adjusted EPS to range from a slight decline to modest growth.
Despite solid revenue growth, profitability metrics showed some pressure. Transaction margin dollars, excluding interest on customer balances, rose 3% to $3.5 billion. However, GAAP operating margin declined by 182 basis points to 17.8%, while adjusted operating margin dropped 229 basis points to 18.4%.
Dividend Announcement
PayPal’s board of directors declared a quarterly dividend of $0.14 per share, scheduled for payment on June 25, 2026.
