PayPal Shares Dip 4.7% After Wells Fargo Downgrades To Market Perform

Shares of PayPal Holdings Inc. tumbled 4.7% in premarket trade Friday, after Wells Fargo analysts downgraded the stock to market perform from e are lowering our rating to Market Perform from outperform after news of a new partnership with Visa. The deal may create interim pressure on funding estimates, they wrote in a note. "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," they wrote. PayPal posted a 15% rise in quarterly revenue and an increase in profit, as payment transactions rose. Shares have gained 11% in the year so far, while the S&P 500 has gained 6%.