Chief Financial Officer John Rainey said that “the impact of Omicron and the effect of inflationary prices combined with lack of stimulus, is having an impact on spending” and that this is “most pronounced” on lower income users.
“The persistence of inflationary effects on personal consumption, labor shortages, supply chain issues and weaker consumer sentiment have led us to adopt a more cautious outlook,” he added.
Analysts at Mizuho Americas said in a report Wednesday that the “disappointing” outlook “marks a return to earth” for PayPal “following the Covid sugar rush” that has boosted demand over the past two years.
PayPal CEO Dan Schulman also noted that small business customers are being hurt by supply chain woes and other “exogenous factors.” He added that e-commerce growth rates during the key fourth quarter holiday season also didn’t live up to expectations.
BTIG analyst Mark Palmer, who downgraded PayPal stock to a “neutral” rating Wednesday, noted in a report that PayPal’s weak outlook is “a sharp contrast with the more upbeat annual outlooks offered recently by the card networks.”
But Schulman seemed undeterred by the possibility of more scrutiny on the BNPL industry from Washington
“We’re going to increase ‘buy now, pay later’ capabilities, which is on a tremendous roll,” he told analysts Tuesday.