Following PayPal’s earnings release, Amrit Dhami, Thematic Analyst at GlobalData, a leading data and analytics company, comments:

“PayPal was one of those companies that rode the crest of the COVID-19 wave. However, it is now coming back down to Earth as the world opens back up—it is not alone, we have seen the same with the likes of Netflix and Peloton. Not only is ecommerce no longer the only option for consumers, but a host of macroeconomic crises are hiking up costs for businesses worldwide. However, this does not explain why PayPal has fared so much worse than others in the digital payments and mobile wallets space, like Klarna and Visa.

“PayPal once ruled the roost in online payments, catalyzed by its partnership with ecommerce giant eBay. However, their split has hit PayPal’s revenues hard. Quite simply, eBay doesn’t need PayPal anymore thanks to open banking (where banks open up data for regulated providers to access). Giving third parties access to banks’ infrastructure has been an important step in shifting the ownership of customer data from traditional banks to the customer.

“PayPal knows it is facing strong competition; it has revised its strategy of attracting new users to one of retaining its existing users. The company is very much the old horse in the stable that still yearns to run. Even though it has been innovating with offerings such as ‘Pay in 3’ and a cryptocurrency service, this is just an attempt to keep up with its younger and flashier competitors—Klarna, Revolut, and Square—which are already focusing on these areas as part of their core offerings. Klarna is the face of the emerging ‘buy now, pay later’ trend, and is the company that the younger generations are flocking to.

“The results of PayPal’s earnings call and its poor market performance further underline the fact that the platform appears to be past its prime.”