PYPL – Market expectations are for Uniform ROA to soar, but management may have concerns about guidance, operating margins, and transaction costs

• PayPal Holdings, Inc. (PYPL:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 76.1x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about meeting 2021 guidance, operating margin performance, and transaction cost reduction.
  
• Specifically, management may have concerns about raising 2021 EPS growth and net new active accounts guidance, as well as maintaining transaction cost reduction trends for Buy Now, Pay Later. Additionally, they may lack confidence in their ability to beat revenue guidance, sustain operating and transaction margin performance, and improve other value-added service revenue. Furthermore, management may have concerns about their reserve coverage ratio, their innovation partnerships with governments, and the pace of the travel recovery. Finally, they may be exaggerating the extent of the paradigm shift to a digital economy and retail landscape and they may lack confidence in their ability to expand Buy Now, Pay Later’s overall share in checkout platforms.