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PayPal stock slumps after 2022 guidance disappoints, customer strategy shift

Feb. 02, 2022 7:54 AM ETPayPal Holdings, Inc. (PYPL)MA, VBy: Liz Kiesche, SA News Editor120 Comments

eBay Germany To Fire 400 Employees

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PayPal Holdings (NASDAQ:PYPL) stock drops 17% in premarket trading after at least three analysts downgrade the stock on the payment tech firm's weak guidance and several others trim their price targets for the stock.

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Comments (120)

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Horrible policies no surprise. I cancelled my account as a customer as I think their policies compared to other organizations are disadvantageous to the customer. Sadly a pass as an investor too. A shame that a company that had such a lead in this space seems to have languished.
VM001 profile picture
Everyone in my kid’s generation uses Venmo extensively and lately I am finding most small service providers also are accepting Venmo payments. I have never been asked to use Square’s (Block’s) Cash app in any context. And thanks to Venmo I almost never have to use actual cash. I plan to hold PYPL just to see how they monetize Venmo. Should be significant...
Guero777 profile picture
It’s clear that the winners in the space are V and MA. Period. Conversation over.
@Guero777 I agree with you V and MA are the best in the sector. However, a little allocation for Paypal potential if they can execute isn't a horrible idea.
Longbow Archer profile picture
@Guero777 lol - okay, well PYPL's Venmo is the winner on the iPhone and the iPhone is the winner with millenials and gen z.

V/MA are good cash cows, like BRK.A/BRK.B but the war on cash is also a war on plastic with those under 30 years old and in some parts of the world they are going straight from cash to mobile payments and bypassing cards altogether.

For someone already old/retired the best bet is V/MA but for anyone not looking to bank Social Security anytime soon the growth is with AAPL as BRK.A/BRK.B will tell you and for financial matters that means Venmo/PYPL.
@Longbow Archer

I actually prefer the likes of FIS/FISV/GPN over V/MA. The first group grows at the same rates as V/MA, but trade with half the valuation or less.
My favorite reaction to this was Jim Cramer this morning. Dick was completely livid that he was blindsided by this report. Whining that the stock should be sold by everybody because they didn't telegraph this report. Kinda confirms what I always suspected with this idiot---no inside info, no play. But the emotional calls to sell because *HE* was slighted was priceless. Such a worthless tool for investment picks!
doctorslernon profile picture
@jeffk100 Inverse Cramer ETF would be a worthwhile investment.
Gene Jaquet profile picture
God I hate this stock. My PayPal position is only a third of my Google position, so even though google shot up a whopping 8%, the gain was wiped out by paypal's 24% collapse.

I mean, it's like on your birthday they bring you a cake and just as you're about to blow the candles out Daniel Schulman swipes it away from right under your nose.

Top management needs to change.
@Gene Jaquet maybe rely on valuation to pick stocks rather than momo?
Murad Shawar profile picture
@jeffk100 PayPal’s Valuation is getting pretty sweet at 80$ I would scooop 100 shares to average down
Gene Jaquet profile picture
@jeffk100 uhhh... I opened my position in 2019 avgerage cost $193. Sorry if I gave you the impression I was a day trader, but I'm not.
Gordon Gekko Greed profile picture
Wow, this company is the perfect example of the meaning "house of cards".
Some of the comments on the this article make me wonder how much (or little) people understand about this company. There are multiple benefits to using PayPal ranging from the firewall mentioned which greatly reduces your CC info getting compromised in a hack, the ability of small retailers and entrepreneurs to take CC payments without a vendor agreement and the fact that they have millions of customers including through their Venmo acquisition they can sell other services or goods to. All that said, I knew they would have difficulty after eBAY cut ties with them and the stock price got way beyond itself. IMO it is still too expensive with its projected growth, barring management ability to excute on new ways to monetize their platforms and customer base. On the other hand, it is making lots of money with its current business model and will continue to do so. What multiple is justified the market will determine but I'll sell puts at 80 or 85 all day for a decent premium.
who knew leftists could destroy companies for many of the same reason they destroy large cities. Maybe esg investing only works when somebody is giving away trillions?
zoeshamu profile picture
@jeffk100 who knew rightists could make corruption smell like roses ...

This is just poor execution. Politics has nothing to do with it. I hold PayPal through FBSOX.. So I hardly felt it. This was classic single stock risk. Sorry you got burned.
Who Moved My Cheese profile picture
@jeffk100 Yeah. I heard that. Those darn democrats have been in the pizzeria basement for years planning PayPal's demise. And large cities are next!
There was never a customer shift to begin with lol. I feel like it was made up. I'm not sure about anyone else, but the only time I've ever used PayPal is when it was the ONLY way to pay the service provider, which is extremely uncommon.

The place to be in the payments space has always been and will always be MA and V. This whole "fintech" thing, is practically a scam on investors, and what's really bad is that I'm certain there will be people who disagree with me -- and they are the ones I'm talking about getting scammed.
zoeshamu profile picture
@DrewMcVay In some parts, I agree. But if a website provides multiple payment options where PayPal is an option, I would use PayPal instead of V or MA. Also, I normally look for other websites that sell similar stuff and have the PayPal option for payment. I just have a poor view of websites abilities to keep up with security updates. One hears Target, or some other shopping website falling victim to hacks where customer info is obtained. So having PayPal as a payment option is a start. Multi-factor authentication is good. Having both is better. Like a double security blanket.
I use it all the time as it is essentially a firewall between me and the vendor.
I like Paypal and have been using it while I can. Similar pattern to Netflix after their earnings and don't be surprised if Bill Ackman scooping up couple millions of shares soon.
They risk becoming the ebay of payments, no leassons learned since
the dotcom crash. Millenials in action.
@Keops they even came from ebay... ha
Clauser1960 profile picture
Finally even wokes have understood Paypal is not progress but regress... the useless middle man
Does anyone use Paypal? I used it a few times back but what is the need now?
@85Bearzz i don't even understand why anyone uses it. why not just use a credit card. Why do i need to link a bank account to a paypal account to buy something and then transfer the money back to my bank account when I'm done. Why not just use a credit card

and if I want transfers why not just transfer the money to my bank. why a middle man?
DividendInvestorInMinnesota profile picture
@85Bearzz I use it to pay family and friends and to sometimes pay for my Play Station games. Never keep more than a couple hundred in it tho..

Do you use Venmo?
reminder, paypal needs to pay Pinterest money for breaking up.
@Finding Your Retirement was the breakup fee listed anywhere? I might’ve scrolled too quickly.
Another "woke" company focused on social justice issues taking their eye off the ball and whiffing. The failed Pinterest acquisition was the bell ringing to exit this poorly managed organization.

atTheNoughtyGrad profile picture
@Blue Scorpion It's starting to look that way..
Who Moved My Cheese profile picture
After losing ebay I'm surprised PayPal is still in business.
atTheNoughtyGrad profile picture
@Casino Hop Daddy you obviously have no idea what the company does nor have anything useful to say. Cheers.
Who Moved My Cheese profile picture
@atTheNoughtyGrad And yet you found it important enough to comment on. Cheers.
So happy with this drop, just bought alot at 130 for the long term.
People saw this coming a while ago. PayPal joining in the deplatforming of conservatives didn't help them anymore than it's helped Twitter.

"More broadly, she thinks that share gains could slow “by a thousand cuts” thanks to the rise of a number of technologies that separately eat away at opportunities for PayPal. These include the growth of buy-now pay-later (BNPL) services, the ability to auto-fill credit-card information on some web browsers, and the threat of Apple Pay as ever more commerce shifts online. “It is an understatement to say that the payments landscape is rapidly evolving with many powerful trends emerging,” Rawat said in her note to clients. “While PayPal is actively investing and evolving, it simply has more turf to defend versus peers in our view.”
Special Companies Watch profile picture
@donfdraper they said that when paypal was at 30.. Apple pay risk haha
@Special Companies Watch payments is a fast moving increasingly competitive business. PayPal was essentially invented to be the mediator between customers and small vendors that people didn't trust much. Ebay just cut them out of the loop to take that on themselves, which I think foretells the decline of that business. People can use Apple, Google and several other bank or app services to send money to individuals.

PayPal may have to reinvent itself soon. I'd probably seek to take Stripe head-on in overseas markets and offer banking and payment services in underserved parts of developing countries, since there's a shortage of competition there.
Cristi_an profile picture
:)) wasn't so bullish on this company but this is what i call a total overreaction that worth speculating on it.
Uncle Pen profile picture
@Cristi_an Maybe, but the way they handled the call shows a lack of confidence.
Stefan Redlich profile picture
PayPal has no moat and nobody needs PayPal. It is nice to have but you don't need it. Stock is dead and company needs to find new business
Special Companies Watch profile picture
@Stefan Redlich you have no idea what your talking about. I hope your articles are better researched
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