PayPal and Meta Platforms (fml Facebook) Stocks’ Rout: Is This Beginning of the End?

Yesterday two trendsetting technology stocks belonging to different hi-tech segments posted their not-so-bad quarterly earnings results, which resulted in a sharp selloff of both companies’ shares. Does thing mean something big for Nasdaq as a whole going forward?

PayPal (PYPL) stock had fallen more than 40% before it slightly bounced back. PayPal put out guidance that took investors by surprise. PayPal seemed to back off its own 5Yr growth targets and now expects a slightly more pressured 2022 vis-a-vis prior expectations provided on the Q3 earnings call. PayPal is now only expecting to grow its revenues by 17% YoY in 2022, which is slower than analysts estimated, but definitely far from catastrophic projection. Earnings estimates for 2022 dropped to $5.28 per share from a peak of $5.90 per share back at the beginning of September, representing a decline of 10.5%.

Furthermore, PayPal said its ability to keep meaningfully increasing its net active accounts has come under pressure. JP Morgan analysts said “The company's guidance was "broadly disappointing, but probably necessary to reset expectations in order to get back to beating and raising expectations."

Meta Platforms, which was previously known as Facebook, in its turn, reported Q4 revenue of $33.67 billion, which beat the consensus estimate of $33.38 billion. Quarterly revenue was up 20% YoY. The company reported earnings per share of $3.67, missing estimates of $3.84.

Meta reported 2.91 billion monthly active users for Facebook. Daily active users were 1.93 billion to end the year, up 5% YoY. Advertising revenue in the quarter was $32.6 billion. The company said ad impressions delivered in the fourth quarter were up 13% YoY. The company also saw ad prices up 6%.

Again, this was not definitely the best FB’s quarter, but nothing pointed to the impending systemic weakness of the company. Yet, its stock came under enormous pressure after the publication.

Unfortunately, these two separate cases point to the growing Nasdaq bearishness, and the next iconic stock that may come under pressure after the publication of its quarterly results might be Intuit (INTU), which earnings release will be on February 25, 2022. Our special concern in this respect is the future performance of shares of Visa Int’l (V), whose next quarterly financial report is scheduled for Apr 25, 2022.