File Photo: The smartphone with the PayPal logo is located on the laptop with this illustration taken on July 14th, 2021.
Dado Ruvic | Reuters
PayPal, block and positive Everything is closely tied to consumer health, with investors at Edge heading for revenue reports.
The market was massively volatile to start the year due to concerns about President Donald Trump’s drastic tariffs and the prospect of rising import costs leading to rising unemployment and reduced consumer spending.
Specializing in e-commerce, there will be an end to the minimum trade exemption on effective Chinese imports on May 2nd. Changes aimed at discounted shopping apps like Temu and Shein are threatening hundreds of billions of dollars with low-cost, cross-border e-commerce volumes.
“The impact of tariffs and macros added another wrinkle to ’25,” an analyst at Wells Fargo wrote in a note on April 16th. The bank said it is particularly exposed to tariff-related volatility and macro uncertainty, given that 90% of its revenue comes from consumer-driven transactions.
PayPal is the first in the group to report revenues after the close of transactions Tuesday. Block, the parent of Square, continues Thursday. AFFIRM is scheduled to report the results next Thursday. Their stock prices have been hit harder this year than the broader market. PayPal has dropped by 23%, blocks have dropped by 32%, Affirm has dropped by 19%, while the high-tech Nasdaq has dropped by 10%.
Stocks rebounded last week as Wall Street announced that the Trump administration advanced its trade deal and showed some optimism that tariffs were not as extreme as previous proposals suggested.
President Trump signed an executive order in early April, imposing tariffs on more than 180 countries and territories. After the market quickly plunged, the president quickly announced a 90-day suspension on most tariffs, but collected imports from China, reaching 145%. The universal tariff rate for goods imported from most countries to the US is 10%.
FinTech reports land during Megcap Tech’s revenue season, Meta, Microsoft, Amazon and apple Everything has been announced this week. Tesla and alphabet Both were reported last week and discussed the potential impact of policy changes on revenue calls.
In Alphabet’s revenue call on Thursday, Google CEO Philip Schindler said the end of the De Minimis trade loophole will “slightly face the advertising business in 2025” from retailers, primarily from Asia-Pacific.
Google said it was “unavailable in macro environments,” but it said “we have had a lot of experience after uncertain times.”
E-commerce challenges
When a complex message comes from the administration, businesses take into account uncertainty and have little ability to provide accurate forecasts this year and the rest of the year. Volatility reached such heights in early April. This affirmed by buying now, paid in a later market, delaying the long-awaited IPO shortly after ticket marketplace StubHub filed a prospectus with the SEC.
In a report on April 17, Barclays analysts said tariffs would be significantly heavier on e-commerce sales, particularly for products that were not previously included in the US. The company estimates that Temu and Shein represent more than 30% of the flows affected, many of which are tied to digital wallets, buying now, paying later providers, and representing card processing infrastructure.
According to analysts at Wells Fargo, PayPal derives most of its sales from consumer transactions, with 40% of revenue and total payments coming from the international market. The bank reduced its price target from $80 to $74 on April 16, citing margin pressure as e-commerce trends softened and competition rose.
PayPal is being supported by Venmo, but if consumer spending drops, that segment is also threatened. According to Wells Fargo, quarterly growth expectations, particularly a 5.5% increase in brand checkout volume, could be too high.
Analysts surveyed by LSEG estimate PayPal will have earnings growth of just under 2% over a year ago, with revenues of $1.16 per share.
Jack Dorsey’s block faces pressure in multiple areas. Cash app users’ growth slowed in March, up just 1.3% from the same period last year. Barclays flagged the block as one of the names exposed to small business churn and low-income volatility.
According to LSEG, the block is expected to report revenue growth rates of around 4% to $6.2 billion, with earnings of 87 cents per share.
AFFIRM reported a 30% increase in monthly active users in March, but more stringent credit terms and wider economic cooldowns could reduce the growth in recent loan volumes. The business is looking forward to purchasing electronics, apparel, furniture and other consumer goods.
LSEG consensus estimates that AFFIRM is projected to report revenue growth rates of between 36% and $783 million and a loss of 3 cents per share.
In a memo on April 15, Barclays analyst wrote that in March and early April, many of the retail market may have experienced a “ups” in discretionary spending as consumers rushed to make purchases prior to the customs implementation in May.
“This scenario would essentially kick emotional,” a Barclays analyst wrote.
Representatives from PayPal, Block and Affirm declined to comment.
Watch: Interview with PayPal CEO Alex Chriss
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