PayPal is going all-in on crypto in 2021, building a wallet and touting big plans for both Venmo and its core payment unit. However, the company was conspicuously silent on cryptocurrencies on Tuesday, barely mentioning technology in its second-quarter earnings call.
The earnings call was largely upbeat with news of a $15 billion share buyback program, with activist investor Elliott Investment Management now one of the largest shareholders. These developments, along with PayPal outperforming analysts’ expectations, saw the stock surge his 14% in after-hours trading.
It’s a welcome turnaround for shareholders, as the company has lost 54% of its share price since the beginning of the year as it struggled to maintain the momentum it enjoyed during the pandemic.
PayPal’s Tuesday earnings also included the appointment of a new chief financial officer, while crypto was relegated to the background. It has revealed that it has started transferring virtual currencies between people, allowing them to send and receive to family and friends without fees on PayPal in the United States.
Cryptocurrencies have taken a hit so far in 2022, with Bitcoin, the most popular cryptocurrency, down about 50% since the start of the year, and Ether, the second most popular cryptocurrency, about 55%. Falling. Both cryptocurrencies have risen since the Federal Reserve hiked interest rates by three-quarters of a percentage point last week, but the two most popular cryptocurrencies have fallen about 66% from their highs last November. % is down.
Instead of explaining the company’s cryptocurrency strategy, Shulman simply said on the earnings call that “digital wallets are the future,” adding that the company is doubling down on this business area, which was first introduced in 2021. .
“We’ve actually seen a fair amount of adoption and a fairly low churn rate for entrants, so we’ll continue to invest there,” he said.
Despite the lack of mention, a PayPal spokesperson said the company’s stance on cryptocurrencies has not changed.
“Cryptocurrency remains a strategic priority for PayPal and was so referenced in the Strategic Initiatives and Business Updates section of our release,” the spokesperson said. luck on mail.
As Shulman emphasized on the earnings call, a focus on digital wallets is one of three priorities as PayPal cut back and focused on some areas such as marketing and staffing. In addition to digital wallets, Shulman highlighted two other areas of the business as priorities: checkout, which is the core of PayPal’s business, and allowing merchants to customize shopping carts and integrate them with their own platforms. It is a brain tree that
Schulman also said the company is pulling out of other areas, including plans to offer stock trading on the platform, which CNBC reported the company was considering last year. The company spearheaded the effort last year by creating a unit called Invest at PayPal, according to CNBC, but on Tuesday Schulman said the company has changed its focus.
“We were going to focus on investments like stock trading this year. We’re not going to do that,” Shulman said. We have also been able to reduce the regulatory footprint we thought we had.”
PayPal has reaffirmed its commitment to cryptocurrencies for now, but it’s unclear if the company’s changing priorities and pressure from activist investor Elliott will change the crypto landscape in the future.
PayPal reported second-quarter revenue of $6.8 billion on Tuesday, slightly above analyst expectations of $6.78 billion, according to Factset. It was also $0.93 per share, beating analysts’ expectations of his $0.87. As of Wednesday, PayPal’s stock was up about 9.7% to $98.40.
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