Strategy Shift Focusing on Large Accounts
The analysts noted that PayPal had shifted its strategy to focus on its largest accounts, which generate the majority of payment volume on the platform. Although this approach has resulted in consistent payment-volume growth, other company performance aspects have declined.
New Accounts Shrink and Profit per Transaction Falls
In their analysis, the Edward Jones team pointed out that the number of new accounts has decreased, and profit per transaction has fallen despite signs of stabilization in previous quarters. They attributed this decline to the slower growth of PayPal's brands due to increased competition.
PayPal Shares Reflect Reduced Growth Outlook
The analysts concluded that PayPal shares reflect their reduced growth outlook and are now appropriately valued. Credit Suisse analysts also lowered their recommendation on PYPL stock after the latest earnings report.
PayPal Shares Drop 12.7% on Wednesday
Following these downgrades, PayPal shares experienced a significant 12.7% drop on Wednesday.