PayPal on a downward spiral over competition and growth concerns - The Average Joe

    PayPal on a downward spiral over competition and growth concerns

    Victor Lei β€” Head of Research

    November 18, 2021

    paypal stock

    November 18, 2021

    Fintech giant, PayPal (NASDAQ:PYPL) is stuck in a downward spiral β€” while the payments industry continues to rise.

    What’s the big deal? A pandemic shift to digital and e-commerce benefited PayPal β€” the payments super app that makes payments and transfers easy at a low cost.

    But growth stalled in 2021 β€” sending PYPL down by over 30% since July β€” down 11% on the year β€”Β  on top of analyst downgrades over growth concerns:

    • Sales growth peaked at 30% in the first quarter β€” declining to 13% in the recent third quarter.
    • PayPal blamed slower growth on e-commerce slowing due to supply chain issues.

    Investors also didn’t support its Pinterest acquisition plan for $40B in October β€” which fell through. But don’t count PayPal out just yet.

    • This month, Amazon announced a partnership to accept payments from PayPal-owned Venmo.
    • Investing and crypto features were added to its app β€” allowing crypto to be bought/sold or used to make purchases.

    PayPal also acquired Japanese BNPL firm, Paidy, for $2.7B in September β€” expanding its buy now pay later (BNPL) product. And looking at payments volume, PayPal is already at Affirm’s levels.

    Prime real estate: Competition is everywhere for PayPal. Sudheendra Chilappagari pointed out β€” the checkout page has become the most expensive real estate on the internet β€” filled with payment options like:

    • Payment services β€” Shop Pay (Shopify) and Amazon Pay.
    • BNPL options β€” Affirm and AfterPay (Square).
    • Crypto-based tools β€” Coinbase Commerce, CoinPayments.

    In addition to traditional payment methods like credit cards.

    Investors: PayPal is up 414% in the past 5 years but competition has increased. If PayPal doesn’t stay ahead, growth could slow even more. But for now, it’s a highly profitable business and its global presence keeps it relevant.

    Must-read: The future of fintech is financial super apps β€” and PayPal wants in.

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