PayPal was one of the companies that thrived during the pandemic, as consumers were forced to depend more on online transactions. The company’s revenue shot up from $17.8 billion in 2019 to more than $25 billion in 2021. Shares of the company also saw new heights during that period. However, as pandemic restrictions began to ease, PayPal’s stock growth started to fall off.
The Rise and Fall of PayPal
During the height of the pandemic, e-commerce sales accounted for 16.4% of total retail sales in the U.S. Since then, the growth has largely slowed down, remaining under 15% the past two years. As the lockdowns subsided, people went back to in-person spending, and some even went back to cash.
PayPal’s total payment volume has seen continuous gains, but its stock growth has slowed, with rising competition in the digital-payment space being a major contributing factor. The positive side of PayPal’s focus on e-commerce is that it’s a high growth area and that benefits them over time. However, the negative side is that that’s where a lot of the fintech innovation is centered around, and a lot of the investment is going after that space because it is the highest growth space.
Disappointing Earnings Reports
Within just a year, PayPal’s stock lost all the gains it had made amid the pandemic through a series of disappointing earnings reports. A lot of investors and PayPal themselves thought that the e-commerce growth was going to continue to grow at really significant levels. At the same time, the competition in the digital-payment space is becoming more intense.
CEO Dan Schulman commented during PayPal’s 2022 third quarter earnings report that “while there are a number of unknowns regarding the macro environment, we can largely control our spend and its implication on earnings growth.”
The Future of PayPal
The future of PayPal is uncertain, but the company is still one of the leading digital-payment companies in the world. PayPal’s revenue is expected to keep growing, and the company is likely to continue to dominate the digital-payment space. However, to keep up with the fierce competition, PayPal will need to innovate and come up with new solutions that will attract more customers and make its services even more accessible and convenient.
Despite the challenges that PayPal is facing, it’s still one of the most popular and trusted digital-payment companies in the world. Its total payment volume is continuously growing, and the company is expected to keep dominating the digital-payment space. However, to keep up with the competition, PayPal will need to continue to innovate and come up with new solutions that will meet the evolving needs of its customers.