INDONESIAKININEWS.COM - Shares of PayPal fell by the most ever in a single day after the planet’s most popular digital payment company post...
On Wednesday morning, its stocks cratered by almost 25%, wiping away billions in market value. Up until now, the pandemic had really been a boon for PayPal, with the sudden ubiquity of digital shopping and in-person payments evaporating. At one point in 2020, if you can believe it, PayPal, which also owns Venmo, was worth more than every bank except JPMorgan.
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But as lockdown measures began to ease, so did investor excitement. Today’s tumble brought shares back down to early-2020 levels.
PayPal executives walked back their ambitious growth strategy—which had involved doubling the number of worldwide users, to 750 million—and offered several justifications for why. Among them were what you might call “the usual suspects”: the end of government stimulus programs, rising inflation, continued labor shortages, broken supply chains, the Omicron surge.
However, PayPal is also getting clobbered by some unique forces: The five-year operating agreement it had set up with eBay—PayPal’s ex-owner, and arguably still its single biggest corporate partner—just ended, and the giant online marketplace has announced it’s going to switch to a novel payments platform of its own design.
PayPal execs also admitted they’d had to close 4.5 million accounts last quarter that were opened by “bad actors,” or, essentially, bot farms created to take advantage of PayPal’s generous sign-up rewards. As a result, PayPal also had to lower its forecast for new users.
Finally, and perhaps most crucially, cold grimy cash has hardly been a payment method of choice during the pandemic, but a new IRS policy change could be changing some people’s minds.
To help it catch tax cheats, the agency said that starting January 1, payment processors like PayPal and Venmo must report all business transactions of $600 or more.
For total payment volume numbers, PayPal has increasingly relied, especially in the past two years, on transactions involving gig workers and other self-employed contractors. Moving forward, they might prefer to be paid in cash after all.
Source: fastcompany
