PayPal (PYPL) — 2024 Guidance — February 24, 2024

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PayPal (PYPL) — 2024 Guidance — February 24, 2024

There was a lot of confusion stemming from PayPal’s 2024 EPS guidance of $5.10. The company will begin including stock compensation in non-GAAP EPS starting in 2024, but it was a bit unclear when that would start to impact its EPS. I finally heard back from the company. The $5.10 2024 EPS guide (which is identical to 2023) still includes the stock compensation charge. It will begin to exclude the charge starting in Q1 2024, which is when EPS will take a hit and apples-to-apples comps will be thrown off. This means EPS growth on an apples-to-apples basis will be 0% in 2024.

Why is PayPal making this change? They say it’s for better transparency and considering stock comp is a real part of their operations. I think there’s truth to this, but I also think there’s more to it. I think the new team plans to aggressively trim headcount over time and slow the pace of hiring. I think it sees a seamless path to greatly reducing the stock comp number. So? Why not include it in non-GAAP EPS at the start of your tenure to boost overall long term earnings growth even more.

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