If you had substantial holdings of PayPal stock in 2021, you are probably feeling a little bit burned right now.
After all, the digital payment company had one of its worst bear-runs on record, with the share price peaking in February 2021, before losing almost two-thirds of its value at the start of 2022.
The company had started the year in an incredibly promising position, with major expansions in the pipeline and the rollout of new services such as crypto trading and credit facilities giving plenty of reason for optimism. So, what happened?
Let’s take a look at what went wrong for PayPal in 2021, and whether it can turn things around in the year ahead.
What went wrong?
First, it’s worth looking at exactly what went wrong for PayPal, especially since its outlook at the start of 2021 was rosy. Perhaps most importantly, its revenue projections and predictions of new users did not match with reality.
It’s worth looking at two important time periods; November 2021 and February 2022, two months that count as the worst on record for PayPal stock.
In November 2021, PayPal released its Q3 earnings report, which showed that revenue growth had slowed substantially, to 13% (down from 25% at the same time last year).
In February, the share price dropped a staggering 24% in one day to a multi-year low of $113 per share, the result of even lower earnings and signs of caution from investors. One of the main catalysts this time was the transition of the e-commerce giant eBay to its own digital payment method, with the company scrapping PayPal from its services altogether.
Meanwhile, it was revealed that account growth figures were vastly overestimated, as PayPal moved to delete 4.5 million “illegitimate” new users from the platform. All of this had led to PayPal’s continued downward spiral.
Signs of a better 2022
Despite all of this, there remain plenty of signs of hope on the horizon for PayPal. One of the most promising signs is PayPal’s recently-inked deal with Amazon, the world’s largest retailer. The ‘Pay with Venmo‘ deal will allow PayPal’s millions of Venmo users to use the platform’s ultra-speedy ‘Checkout Service’ when shopping on Amazon, something that will likely prove a substantial boost to PayPal’s coffers.
Meanwhile, it is clear that, although some industries are moving away from PayPal as a service, others continue to hold steady.
his is especially true in the gaming sphere, with the likes of Xbox Live, Switch, Blizzard, EA, and Fortnite all offering PayPal as their primary digital payments gateway for users.
The high-growth online casino sector, which is predicted to reach new heights in 2022, is sticking with PayPal. This is clear by looking at third-party casino review sites that rank the best PayPal casinos, highlighting just how much real-money casino gamblers value the convenience and security offered by PayPal.
If this growing industry continues to offer PayPal as a primary payment gateway, the share price could receive a welcome boost in 2022.
Where the PayPal share price will head in 2022 remains a mystery, but there are strong signs that the worst is over. Will you buy or sell in 2022?