[Asia Economy Reporter Jeong Hyunjin] U.S. online payment company PayPal's stock price plummeted more than 20% in a single day after it forecasted that its performance this year would fall short of its initial targets due to the spread of the Omicron variant, rising inflation, and global supply chain issues.
According to the Wall Street Journal (WSJ) and others on the 2nd (local time), PayPal Holdings announced in its earnings guidance for this year that it would withdraw its goal of doubling its active user base set last year and instead focus on increasing usage frequency among existing customers rather than acquiring new ones. The number of new accounts created last year was also tallied at 49 million, falling short of the originally planned 55 million.
PayPal forecasted several business risks this year. It anticipated that the reduction of government stimulus measures, labor shortages, the spread of the Omicron variant, rising inflation, supply chain issues, and increased effective tax rates would put pressure on its business. Additionally, it is expected to suffer damage from discontinuing its business with eBay, which was its largest customer acquisition channel.
As the earnings outlook fell significantly short of market expectations, PayPal's stock price dropped about 25% that day. It closed the day at $132.57, marking its lowest level since May 2020.
The WSJ reported, "PayPal was one of the most favored companies by investors in 2020-2021. During the pandemic, as online shopping increased, transaction volume and profits grew, and its market capitalization was higher than most U.S. banks except JPMorgan," adding, "As in-store sales gradually increased again, investor sentiment deteriorated."
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