PayPal Braces For $228 Million Loss In Latest Quarterly Report

The PayPal app logo seen on a mobile phone in this illustration photo October 16, 2017.
(Photo: REUTERS/Thomas White/Illustration/File Photo)

Stocks of PayPal have been struggling since early Monday. On October 7, the company's shares were valued at $102.03 each heading into the closing bell and, the following day, its stocks collapsed again to $99.33.

Although the company had recently disclosed it is acquiring Chinese company GoPay, its shares seemed to just buck the latest news. Among the factors why its shares plunged on Tuesday maybe due to the 8K filing, it made with the Securities and Exchange Commission.

But Wednesday saw an upward tick for PayPal, when its shares broke the $100 level, only to fall back again at $99.87 at the closing of sessions. The company was on a slow yet steady climb in the early hours of trade, breaching the $100 boundary in a matter of minutes upon open. PYPL was trading just over the $100 border, late Thursday.

On October 8, the American online money remittance service firm filed the 8-K with the SEC, which showed it had a material disclosure summary of earnings projections days prior to the actual posting of its sales for the third quarter.

PayPal said that its current third-quarter sales report could be badly affected. Based on its initial expectations, the company's quarterly profits summary could incur a decline of around $228 million.

The company also sees an after-tax decline of $177 million as executives blame the slump on weak sales on lethargic investments. The dreary earnings per share could see another decline of -$0.15 a share.

On top of this, PayPal had acknowledged an earnings shortfall in the third quarter this year. The unrealized gain estimated to have an effect of $0.03 on the company's diluted earnings per share. This unearned revenue was stated in PayPal's current-year financial guidance.

In its SEC filing, PayPal also said that some of its major investments waned in market value. This is a critical income generator for its bleak sales projections. Also, the company shelled out half a billion dollars in Uber Technologies, which PayPal expects a 35 percent drop from such investment.

PayPal recently announced that it acquired a 70 percent ownership of GoPay, a Chinese online payment services company. GoPay has a huge fan base in mainland China as well as other countries in the Southeast Asian region. The value of the deal has yet to be divulged.

PayPal's venture into the enormous Chinese market has already been welcomed by top commerce ministers, including the People's Bank of China. With such a very lucrative business landscape, PayPal could soon bounce back from its latest earnings slump.

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