PayPal’s Problems – The Fate of The Digital Payment Company 💸

PayPal’s Problems – The Fate of The Digital Payment Company

Founded in 1998, PayPal began as a simple tech company that provided security software for mobile phones, only first entering the digital transaction space in the year after. Just before the pandemic, PayPal had reached a market capitalization of $126 billion, with a 2019 annual revenue of $17.8 billion. Poised as the leader in the space, the company expanded even further through the pandemic-fueled surge of e-commerce, with their 2021 revenues climbing to upwards of $25 billion. In less than a year, PayPal’s share price soared by over 240% as the pandemic continued, however, all these gains were quickly lost as e-commerce sales fell in the past two years.

Following a series of weak earnings reports at the end of 2021, PayPal not only lost all its gains, but hit a roughly six-year low as e-commerce sales dwindled and competition grew in the digital-payment space. As a company that is completely reliant on online sales, any external factors that influence both consumer behavior and demand have a drastic impact on its bottom line. After Monday’s trading day, PayPal announced its earnings per share that disappointed investors once again. However, hope is not lost for the digital payment behemoth, as they beat both top and bottom-line expectations and raised their guidance throughout the end of the year. Regardless, PayPal’s share price is down over 5% in after-hours trading, with its stock remaining far cheaper than it was just before the pandemic.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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