PayPal expresses concerns about its financial performance amidst the Coronavirus emergency

PayPal
reported its fourth-quarter
earnings in January that was accompanied by guidance for the fiscal first
quarter. In its announcement on Thursday, the online payment processor joined
the league of businesses that are expecting a revenue hit ascribed to the
Coronavirus outbreak in China that is rapidly spreading across borders. PayPal said
on Thursday that its revenue in the first quarter may only be able to hit the
lower end of its previously given guidance.

In
January, PayPal had forecast its Q1 revenue in the range of $4.78 billion to
$4.84 billion. Its estimate for earnings per share (both GAAP and non-GAAP),
however, remained the same, as per Thursday’s statement.

Coronavirus
Has Infected Over 81,000 People Across The Globe

According
to PayPal, the flu-like virus that has so far killed over 2,500 people
primarily in China with an increasing number of confirmed cases in other
countries, is weighing heavily on the global e-commerce activity that is
expected to translate into PayPal’s
poor than expected financial performance in the current quarter.

In
its press release on Thursday, Paypal remarked:

“We
currently estimate the negative impact from COVID-19 to be an approximate one
percentage point reduction, on both a spot and foreign currency-neutral basis,
to PayPal’s year over year revenue growth for the first quarter, as compared to
the revenue guidance provided on January 29^th, 2020.”

With
a total of around 81,400 people infected across the globe, the past week again
fueled the risk that the health emergency will negatively affect the global
economic growth in 2020. PayPal is not the only giant that has downwardly
revised its guidance. Owing to the rising complications of the virus outbreak,
prominent names like Apple and Microsoft have also recently shown concern regarding
their financial performance in the current quarter.

Among
the personal computer manufacturers, HP, Lenovo, and Dell were the first ones
to expect a significant hit to performance results due to the disruption in
business operations.

PayPal’s
Performance In The Stock Market

At the time of writing. PayPal is exchanging hands at $107 per share in the stock market that marks an around 2.5% decline in 2020 so far. Its performance in 2019, on the contrary, was fairly upbeat with an annual gain of around 30%. The stock opened at $84 per share in January 2019 but closed the year at a significantly higher $108 in December. PayPal currently has a market capitalization of $126.49 billion.