PayPal (PYPL) Stock Falls, Wells Fargo Downgrades on Visa Partnership
NEW YORK (TheStreet) -- Shares of PayPal (PYPL) - Get Report are down 8.05% to $36.90 at the start of trading on Friday after Wells Fargo downgraded the stock to "market perform" from "outperform" in a note released earlier today.
PayPal's recently announced partnership with Visa (V) could pressure funding estimates, the firm wrote in a note cited by MarketWatch.
"This then presents us with a situation where we believe that upside earnings revisions are less likely and valuations are not likely to expand, as the market and shares are in a 'holding pattern' while the market tries to balance the attractive top-line/secular story with the new margin paradigm as investors assess the timing of an inflection point when the benefits of the Visa partnership (easier access to off-line merchants, potential partnerships with issuers) may offset the likelihood that higher funding costs pressure margins," Wells Fargo said.
For the second quarter, the mobile payments company reported in-line earnings on better-than-expected revenues.