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PayPal (PYPL): Q4 Earnings Release Estimates and Preview

By:Thomas Westwater

Ahead of reporting earnings on Feb. 7, the company announced global layoffs. Here's what options traders can expect from PayPal's earnings report.

  • PayPal to report Q4 earnings on Feb. 7.
  • Stock fails to react to layoffs and AI innovation news.
  • High IVR gives options traders several options to play earnings.

PayPal Holdings (PYPL) is scheduled to report fourth-quarter fiscal results on Wednesday, Feb. 7.

Just this week, however, PayPal announced that it would lay off about 9% of its global staff, according to Alex Chriss, president and CEO. That isn’t offering much help to the stock price, which is down by about 2% on Wednesday.

An earlier announcement in January that hyped AI-driven enhancements to several of its products also failed to bolster the stock price. Chriss earlier said PayPal would shock the world, but consumers seemed to care little about the announcement. That echoed sentiment following a move from last year that attempted to jump on another trend in the market.

This situation leaves PayPal bulls left with only the upcoming earnings in hopes to rescue the stock price, which is up 0.65% in January compared to a nearly 2% increase in the S&P 500.

What do traders expect from earnings?

Analysts expect PYPL to post adjusted earnings per share (EPS) of $1.36 on $7.9 billion in revenue, according to Bloomberg consensus estimates. Those estimates have remained relatively flat over the past four weeks and represent year-over-year growth rates of 9.8% and 6.6%, respectively.

E-commerce volume, which has held up better than expected, should support checkout growth volume for PayPal’s Q4 numbers. That, alongside increased cost controls and recent measures to temper labor costs, should help PYPL achieve on-target growth.

Investors are also watching to see how revenue per user is trending amid a drive to increase engagement. Active PayPal accounts should hold steady at nearly 430 million. Total payment volume, payment transactions per account and total transactions will also be in focus for investors.

Trading PayPal earnings

As of Jan. 31, PYPL traded with an implied volatility rank (IVR) of 68.4. That has helped juice up options premium across most of the near-term expirations. The Feb. 9 expiration shows an implied move of +/- 4.76 on the stock.

That said, traders who want to take a bullish to neutral stance and intend to capture some of the volatility collapse that comes following an earnings announcement may want to sell a put vertical, or even play an iron condor.


Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater 

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