PayPal stock drops after weak second-quarter margins

(Reuters) – Shares of PayPal Holdings fell nearly 9% in premarket trading on Thursday after the digital payments firm reported weak margins for the second quarter that overshadowed a strong outlook.

The company reported an adjusted operating margin of 21.4% for the three months ended June 30, below estimates of 22%, according to Refinitiv IBES data.

“This was another disappointing earnings report from PayPal,” Edward Jones analyst Logan Purk said. “This will fuel investor’s bearish outlook that PayPal’s focus on its largest customers will result in lower overall profitability.”

In May, PayPal cut its adjusted margin forecast for the full year, which worried analysts and investors.

The company forecast adjusted profit per share for the current quarter to be in a range of $1.22 and $1.24, above analysts’ estimates of $1.22.

(Reporting by Niket Nishant in Bengaluru; Editing by Nivedita Bhattacharjee)