PayPal stock soars as promise to become “leaner” eases worries about cryptocurrencies.
November 2, 2023 – 1:45 PM UTC
(Reuters) – PayPal Holdings (PYPL.O) added nearly $4 billion to its market value after a pledge to turn “leaner” fired up investors, even as the payments giant disclosed a subpoena from the U.S. Securities and Exchange Commission tied to its stablecoin.
The company’s shares climbed nearly 7% to $55.12 on Thursday as a strong full-year profit forecast also calmed market jitters about a spending slowdown.
“Simply put, our cost base remains too high,” the company’s new CEO, Alex Chriss, said on Wednesday, adding that PayPal would align its resources to its “most profitable growth priorities.”
The upbeat forecast underscored the robustness of consumers’ financial health, which has allowed them to keep up with their spending binge even as the economic climate remains uncertain.
“Chriss struck the right note and articulated well the challenges facing the company and described a sound framework for improving growth and profitability,” J.P.Morgan analyst Tien-tsin Huang said.
Brokerage William Blair also said it was “encouraged by management’s narrowed focus on profitable growth.”
Shares of PayPal’s peer Block (SQ.N) also climbed nearly 6%.
SEC RAMPS UP PRESSURE ON CRYPTO
The SEC’s subpoena indicates that the regulator is keeping up pressure on the cryptocurrency industry despite recently losing a high-profile court case against digital asset manager Grayscale Investments.
PayPal said it was cooperating with the subpoena from the SEC’s Enforcement Division, which has asked for the production of documents.
Stablecoins are crypto tokens whose monetary value is pegged to a stable asset to protect potential investors from wild swings in prices.
The company became the first major financial technology firm to embrace digital currencies for payments and transfers when it launched its dollar-backed stablecoin in August.
Separately on Thursday, the company named insider Archie Deskus its new chief technology officer, just a day after a naming Jamie Miller its new finance chief.
Reporting by Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty
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What factors contributed to PayPal’s increase in market value despite the SEC subpoena?
PayPal Adds $4 Billion to Market Value with Promise of “Leaner” Approach
November 2, 2023 – 1:45 PM UTC (Reuters) – PayPal Holdings (PYPL.O) saw a significant increase in its market value yesterday, as it pledged to adopt a leaner approach, which excited investors. The payments giant’s stock climbed nearly 7% to $55.12, after it disclosed a subpoena from the U.S. Securities and Exchange Commission (SEC) related to its stablecoin.
PayPal’s commitment to become leaner impressed investors, who responded positively to the news. The company added almost $4 billion to its market value, highlighting the confidence shareholders have in PayPal’s ability to adapt and grow. Despite the SEC subpoena, investors were reassured by the company’s strong full-year profit forecast, which mitigated concerns about a potential spending slowdown.
“Our cost base remains too high,” said PayPal’s newly appointed CEO, Alex Chriss. He emphasized the company’s intention to align its resources with its most profitable growth priorities, acknowledging the need for financial optimization. Chriss’s statement resonated with market analysts, who praised his approach to addressing the company’s challenges.
PayPal’s upbeat profit forecast indicates that consumers’ financial health remains robust, allowing them to sustain their spending habits even amidst an uncertain economic climate. J.P. Morgan analyst Tien-tsin Huang commended Chriss for acknowledging the challenges ahead and presenting a blueprint for achieving growth and profitability. Similarly, brokerage firm William Blair expressed optimism at the company’s narrowed focus on profitable growth.
As PayPal’s market value soared, its peer Block (SQ.N) also witnessed a significant jump in stock prices, with a nearly 6% increase. This demonstrates the positive sentiment among investors towards the overall growth potential of the digital payments industry.
Meanwhile, the SEC’s subpoena suggests that the regulatory body continues to exert pressure on the cryptocurrency industry, despite its recent loss in a high-profile court case against Grayscale Investments. PayPal confirmed its cooperation with the SEC’s Enforcement Division and their request for the production of documents. This development showcases the ongoing regulatory scrutiny faced by the cryptocurrency sector.
It is worth noting that PayPal stands out as a major financial technology firm that has embraced digital currencies for payments and transfers. In August, the company launched its dollar-backed stablecoin, becoming a pioneer in the industry. This move underscores PayPal’s commitment to innovation and its readiness to adapt to the fast-evolving landscape of financial technology.
In a separate announcement, PayPal appointed Archie Deskus, an insider, as its new Chief Technology Officer. This decision comes just a day after Jamie Miller was named the new Chief Financial Officer. These leadership changes highlight PayPal’s efforts to strengthen its management team and position the company for continued success.
In conclusion, PayPal’s commitment to becoming leaner has garnered significant investor support, reflected in the substantial increase in its market value. The company’s strong profit forecast, along with the strategic roadmap outlined by its CEO, Alex Chriss, has reassured investors about its growth potential. Despite the regulatory scrutiny faced by the cryptocurrency industry, PayPal remains at the forefront, embracing digital currencies and laying the foundation for future success.
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