PayPal (PYPL  ) was 28% lower following the company's Q4 earnings report that disappointed investors particularly in terms of guidance. The stock had already been facing a major headwind with rising rates leading to multiple compression for high-multiple tech stocks and fintech companies.

Overall, PayPal is down 59% from it's all-time high set in July. That quarter marked a peak and came just as the company introduced crypto trading which led to a big surge in user growth and revenues. The company also benefited from the pandemic which led to a big surge in use and adoption among consumers and businesses. Now, the company is facing tough comps and is likely to see a sharp slowdown in growth in the coming quarters.

Inside the Numbers

In Q4, PayPal reported earnings per share of $1.11 which was just below expectations of $1.12 per share. Revenue was slightly higher than expected at $6.92 billion vs. $6.87 billion.

Guidance for Q1 earnings fell short of expectations at $0.87 per share vs $1.16 per share. Revenue forecast also slightly missed as the company estimates 15% to 17% revenue growth which was below consensus expectations of 18% growth.

The company blamed some of its earnings slowdown on its disentanglement with eBay (EBAY  ) as its former parent company transitions to its own payment system. PayPal also noted some impact from inflation negatively affecting consumer spending and supply chain issues disrupting businesses and having downstream effects on PayPal.

Another concern is that user growth also seems to be slowing. In part, this was due to the company identifying 4.5 million illegitimate accounts. In total, PayPal has 426 million users and expects to add another 15 to 20 million new accounts this year.

Following PayPal's decline in share price, valuations have become very attractive and are almost in-line with market averages. Currently, the S&P 500 (SPY  ) has a forward P/E of 20 while PayPal has a forward P/E of 24 despite having a faster growth rate and 20% profit margins.

Although, the near-term environment for growth stocks remains turbulent, at some point conditions will improve. The best candidates for a rebound will be high-quality growth stocks like PayPal who have dominant market share in large, expanding industries.