Fri. Dec 3rd, 2021

PayPal’s bid to join the ranks of “super apps” seems to have a new sense of urgency. The US $ 240 billion payment group, which promotes everything from “buy now, pay later” services to banking products, cut its full-year earnings and revenue guidance this week.

After benefiting from the boom in online shopping during the pandemic, PayPal can now see this decline disappear. It comes as eBay – once the mother tongue of customers – weaners from PayPal and on its own payment system.

But PayPal and its investors should keep them nervous. The 12 percent drop in the stock on Tuesday looks exaggerated. PayPal’s numbers are not as bad as they seem at first glance. Stinky 2020 numbers offer a difficult comparison. Nevertheless, it should have year-on-year growth of 19 percent under the new lead of adjusted earnings for the full year of about $ 4.60 on revenue of up to $ 25.4 billion.

Since being released by eBay in 2015, PayPal shares have risen as much as 789 percent to peak in July. In the third quarter, PayPal processed a total of $ 310 billion in payments, 24 percent more than the same period a year earlier. It’s not just existing users who are buying more goods online. PayPal received 13.3 million net new accounts during the quarter, suggesting a secular shift from cash and checks to electronic payments. At Venmo, PayPal’s peer-to-peer payment application, transaction value rose more than a third to $ 60 billion during the quarter.

Indeed, the company needs to focus on user acquisition for its core payment products rather than rushing to embark on new services. His decision last month to abandon talks to acquire social media company Pinterest for $ 45 billion made sense.

There are good reasons why no US company has succeeded in repeating the success of China’s WeChat in building an all-in-one application. There is no urgent need for one in a country with well-developed financial systems and high levels of financial inclusion. PayPal’s resources are better spent elsewhere.

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