PayPal is a renowned multinational financial company that offers an online payment system to the majority of countries. The company offers an electronic alternative to traditional money transfer methods. With the advent of digitalization, their payment gateway has become more and more popular all over the world. On July 23, 2021, PayPal Holdings' stock price reached an all-time high of $308.53. But the company is facing a downfall in its stock price. To date, PayPal Holdings, Inc (NASDAQ: PYPL) shares have dropped over 61%. And the most shocking news is the shares of the company lost 5.5% in the last month and 11% over the previous six months. But the question is, what happened to PayPal Stock (PYPL) in 2022.
What happened to PayPal Stock (PYPL.) in 2022? Why has it declined by 61%?
PYPL saw its stock price fall -25% from February 1, 2022, to February 2. The price falls from $175.80 to $123.57, and it continues to drop. On March 23, 2022, PayPal traded at $114.65, a decline of -14%. If we compare the price from Q4 of 2021, the shares have pulled back by -35%. But the story doesn’t end here, and the price of the shares of PayPal is facing a downfall. The company reported a $341 million net loss for Q2,2022 or 93 cents per share. One year ago, it posted a $1.18 billion net profit. As PayPal's TPV increased 9% (14% in constant currency) to $337 billion, transactions grew 15% year over year to 5.6 billion in the third quarter. Over the past year, both growth rates have decelerated sharply. The reason for PayPal's downfall can be attributed to a variety of factors.
What are the reasons for PayPal’s share price decline?
There is no particular situation that is causing the downfall of PayPal’s share price. The company's new policies, the world economy, and political conditions are contributing to its downfall. Due to pandemic disruptions, PayPal was unable to sustain its meteoric growth. Although the company reported a 7 percent growth rate, the non-GAAP basis came to $0.88 which is down from 2021. Investors are no longer happy with the growth rate coming off of the COVID-19 pandemic. The new business policies have also affected the growth rate of the company. The Russia-Ukraine war has had a significant impact on the share price of the company. Following the war, the company is no longer serving Russia.
Besides, the company lost contact with eBay (one of the biggest eCommerce platforms). In addition, the e-commerce business slowed after the pandemic, which affected PayPal. For the Californian fintech leader, inflation will remain a problem. As part of its fight against inflation, the Fed has raised the prime rate of interest. In September, the Consumer Price Index (CPI) showed an increase of 8.2%, lower than the 9.1% in June.
PayPal is facing tough competition with rival companies which are offering the same service. According to the reports, Apple INC (NASDAQ: AAPL) is growing dramatically. The growth rate in November was 52% Y/Y globally and 59% Y/Y in the U.S. Meanwhile, PayPal adoption fell by 8% globally and 4% in the U.S.
PayPal remains the largest payment type for global e-commerce, making up 16% of purchases compared to Apple Pay's 5%. But the fact is that Apple INC ((NASDAQ: AAPL) is giving tough competition to PayPal. According to trade analysis, PayPal will face severe issues from these types of giant rival companies.
It is also possible for PayPal to fight back over time. PayPal is expected to generate revenue from new sources by expanding into personal finance services in the longer term. It may take some time for Amazon to integrate with the company, but it would be a huge achievement. According to the survey, PayPal core and Venmo commanded 34.9% of all Black Friday online payments, followed by credit and debit cards. Furthermore, the company is focusing on gaining more members.
Final Words
Hope you got some idea about what happened to PayPal shares. And why the share price is facing a downfall. The downfall can be attributed to a number of factors. As a result of recent inflation data, the US Federal Reserve (Fed) will remain aggressive. There is no sign of the Russian-Ukrainian war stopping anytime soon. But new deals and changes in policies can help PayPal to fight back and dominate the market again. The company is also expanding its services to cope with the situation.
