Wednesday, March 22

PayPal sinks on the stock market after the closure of 4.5 million accounts

Shares of the payment services company PayPal They fell this Wednesday on Wall Street more than 26%, after the firm has lowered its ambitions regarding the growing number of active users after having closed 4.5 million accounts during the fourth quarter of 2021, when its benefit fell by 49%.

Between October and December 2021, PayPal recorded a net profit of 801 million dollars (716 million euros), 49% lower than the result recorded by the company in the same quarter of 2020, while revenues totaled 6,918 million dollars (6,183 million euros), 13.1% more.

For the year as a whole, PayPal obtained a net profit of 4,169 million dollars (3,726 million euros), 0.8% below the earnings of 2020. In turn, the turnover of the payment firm grew 18.2%, up to 25,371 million dollars (22,677 million euros).

frustrated forecasts

In 2021, the company added 48.9 million new customers, 13% more, bringing the total accounts to 426 million. However, the growth in fourth quarter of the year was limited to 9.8 million new accounts, against a goal of 12.9 million.

PayPal’s CFO, John Rainey, explained that the growth of new accounts was weighed down by the decline in the low-income consumer spending; changes to some customer acquisition strategies, including incentive-based campaigns; and the disqualification of accounts deemed non-legitimate that seek to take advantage of the incentives offered.

“In the fourth quarter, in relation to the increased use of incentive campaigns throughout 2021, we identified 4.5 million accounts (…) This number is irrelevant to our overall base of 426 million customer accounts, but it affected our ability to achieve our quarterly goal,” he explained during a conference call with analysts.

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In this sense, Rainey announced that PayPal hopes to add between 15 and 20 million net new customer accounts in 2022, adding that the company “no longer considers the medium-term aspiration of reaching 750 million to be adequate.”

On the other hand, the firm expects to increase the volume of processed payments between 19% and 22%, while it is confident that revenues in 2022 will be between 15% and 17% higher than last year. Likewise, PayPal expects to achieve an earnings per share of between 2.97 and 3.15 dollars.