PayPal stock surges as pledge to turn ‘leaner’ keeps crypto concerns at bay
PAYPAL added nearly US$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 US Securities and Exchange Commission (SEC) tied to its stablecoin.
The company’s shares climbed nearly 7 per cent to US$55.12 on Thursday (Nov 2) 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.
JPMorgan analyst Huang Tien-tsin said: “Chriss struck the right note and articulated well the challenges facing the company and described a sound framework for improving growth and profitability.”
Brokerage William Blair also said it was “encouraged by management’s narrowed focus on profitable growth”.
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Shares of PayPal’s peer Block also climbed nearly 6 per cent.
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.
PayPal became the first major financial technology company to embrace digital currencies for payments and transfers when it launched its US 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. REUTERS
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