PayPal Stock Drops. The Financial Chief Delivers a Sobering Outlook.

PayPal stock has plunged this year after multiple years of sluggish revenue and earnings growth. (Courtesy of PayPal)

Key Points

• PayPal’s finance and operations chief anticipates branded checkout service growth to slow by at least two percentage points in the fourth quarter.
• Online-only branded checkout volume, which grew 5% in the third quarter, could decrease to 3% or less.
• Despite the slowdown in branded checkout, PayPal maintains its fourth-quarter guidance due to growth in other services like Venmo and Buy Now, Pay Later.

PayPal Holdings expects growth in its key branded checkout service to slow in the fourth quarter, its finance and operations chief said on Wednesday.

The stock dropped 2.7% to $61.20 after gaining to start the day. Shares are down 28% this year, dragged lower by years of sluggish growth in revenue and earnings.

At a UBS investor conference, chief financial and operating officer Jamie Miller said the payments company’s branded checkout service, which allows merchants to convert sales through PayPal, could grow “at least a couple of points slower” than it did in the third quarter.

Online-only branded checkout volume grew 5% in the third quarter from the year before. That figure was in line with previous quarters. Miller suggested that number could drop to 3% or less.

PayPal is keeping its guidance for the fourth quarter despite the possible slowdown in branded checkout growth. The company has seen signs of strength in other areas, Miller said.

“If you look beyond just branded checkout, you see really nice growth across Venmo, across Buy Now, Pay Later, across our debit card offering, and across our processing business,” Miller told investors. “And we’ve done that with a lot of operating discipline.”

In midday trading, shares of PayPal’s rivals were up. Block , which owns the Cash App and Square, climbed 2.3%. Alphabet and Apple , which offer Google Pay and Apple Pay, were up 1.7% and down 0.3%, respectively.

Write to Nate Wolf at nate.wolf@barrons.com