- tech360.tv
PayPal's Stock Surges Amid Pledge to Streamline Operations
Updated: Jan 8
[Edited] PayPal Holdings saw a significant boost in its stock value, adding nearly $4 billion to its market capitalization, after announcing its intention to become a "leaner" company.
This news comes despite the disclosure of a subpoena from the U.S. Securities and Exchange Commission (SEC) related to its stablecoin.
The company's shares closed almost 7% higher at $55.06, as investors responded positively to the pledge to streamline operations and improve profitability. PayPal's new CEO, Alex Chriss, stated that the company's cost base remains too high and that resources will be aligned with the most profitable growth priorities.
The optimistic forecast also helped to ease concerns about a potential spending slowdown. It highlighted the resilience of consumers' financial health, as they continue to maintain their spending habits despite the uncertain economic climate.
Analysts praised Chriss for addressing the challenges facing the company and outlining a solid framework for growth and profitability. Tien-tsin Huang, an analyst at J.P.Morgan, commented, "Chriss struck the right note and articulated well the challenges facing the company and described a sound framework for improving growth and profitability."
PayPal's positive performance also had a ripple effect on its peer, Block, whose shares climbed 7.4% higher. This demonstrates the overall optimism in the fintech sector. However, amidst the positive news, PayPal revealed that it had received a subpoena from the SEC's Enforcement Division.
The regulator's continued scrutiny of the cryptocurrency industry is evident, despite a recent high-profile court case loss against Grayscale Investments, a digital asset manager. PayPal confirmed its cooperation with the SEC's request for document production.
The subpoena is related to the company's stablecoin, which is a type of cryptocurrency whose value is pegged to a stable asset to minimize price volatility. In August, PayPal became the first major financial technology firm to embrace digital currencies for payments and transfers when it launched its dollar-backed stablecoin. In other news, PayPal announced the appointment of Archie Deskus as its new Chief Technology Officer.
This follows the recent appointment of Jamie Miller as the company's new finance chief. Overall, PayPal's commitment to becoming leaner and its positive financial forecast have boosted investor confidence, leading to a surge in its stock value. The company's ability to navigate the challenges of the cryptocurrency industry and maintain profitability is seen as a positive sign for the fintech sector.
PayPal's stock value increased by nearly $4 billion after announcing plans to become leaner.
The company's CEO, Alex Chriss, highlighted the need to align resources with profitable growth priorities.
The positive forecast eased concerns about a potential spending slowdown.
Source: REUTERS