PayPal Holdings Inc (NASDAQ: PYPL) announced the closure of 4.5 million accounts after discovering that some people had taken advantage of its rewards and incentives programs. The company also reduced its forecast. As a result of the announcement, PayPal’s shares dropped by 25%.
PayPal made this announcement on the earnings call for its fourth quarter, 2021. The company’s Chief Financial Officer, John Rainey, also revealed that it had missed expectations from analysts and that its growth in 2022 would be slow.
PayPal will no longer use incentives to attract customers
PayPal has been utilizing incentives to gain new customers. However, the program became an issue when bots visited websites to earn rewards. For this reason, the company will no longer use this program to acquire customers. However, PayPal assured its investors that the change of strategy was not because of the fraudsters.
Many Big Tech companies other than PayPal seem to have missed the expectations set by Wall Street. Others include Meta Platforms Inc (NASDAQ: FB) and Netflix Inc (NASDAQ: NFLX). As a result, both companies have seen a decline in share value.
Analysts expected PayPal to have an estimate of $1.13 and revenue of $6.88 billion.
PayPal’s arrangement with eBay Inc (NASDAQ: EBAY) comes to an end
Meanwhile, its operating deal with eBay Inc (NASDAQ: EBAY) is over as the latter is starting its payment platform. This move has had an enormous impact on transaction volumes for PayPal. According to PayPal’s CEO, Dan Schulman, this move could put pressure of $600 million on its revenue in the first 6 months of 2022.
Compared to Venmo, which processed $61 billion in payments, the company managed to process $340 billion. Moreover, PayPal got 9.8 million active accounts. This number includes 3.2 million that it gained from acquiring Paidy.
Meanwhile, WP Advisors, LLC has bought PayPal. The firm increased its PayPal holdings by 135.41%. It currently has 14,567 shares. This purchase has had a 0.66% impact on its portfolio. The firm bought the shares for $179.32 to $271.7.
Another firm that bought PayPal was Longitude (Cayman) Ltd. This firm added to its previous holdings by 119.67%. The purchase had a 0.74% impact on its portfolio. Longitude now has 13,400 PayPal shares.
