PayPal Plunging Despite Increasing Crypto Holdings
13 Maio 2023 - 8:40AM
NEWSBTC
PayPal share prices are plunging and currently down 80% from 2021
peaks; the largest draw down ever, market data on May 12 shows.
PYPL closed the week at $61.69, down 3% from Thursday, March 11.
PayPal Shares Crumbling Analysts observe that the decline in
PayPal’s stock price has also resulted in a notable shift in its
price-to-sales (P/S) ratio. PayPal is now down 80% from its 2021
high, its largest drawdown to date. Its price to sales ratio has
moved from a record high of 17x to a record low of 2.5x.$PYPL
pic.twitter.com/w9JjzPXmJb — Charlie Bilello (@charliebilello) May
12, 2023 Previously at a record high of 17x, the P/S ratio is now
at a record low of 2.5x. The P/S ratio is a financial metric, which
evaluates a company’s valuation, and compares its market
capitalization to its total revenue over a specific period,
typically a year. Related Reading: PayPal Co-founder Peter Thiel
Admits He Underinvested In Bitcoin The P/S ratio offers valuable
insights into how the market perceives a company’s revenue
generation relative to its size. The ratio focuses on the rise and
fall of the company’s revenue. This ratio also signifies the amount
investors are willing to pay for every dollar of the company’s
revenue. To put it into perspective, PayPal’s previous P/S ratio of
17 implies that investors are willing to pay $17 for every $1 of
revenue generated by the company. Now, investors are only willing
to pay $2.5 for every $1 revenue. Paypal shares are still at a
premium. A P/S ratio above 1 indicates that investors are still
willing to pay a premium for the company’s revenue. While the exact
reasons behind PayPal’s downturn are not explicitly stated,
speculation suggests that the company is facing a combination of
intense competition and outdated technology. PayPal is one of the
oldest payment processors. As the online payment landscape is
constantly evolving, it has become increasingly challenging for
PayPal to wade off competitors. For instance, banks have
incorporated new systems such as Zelle. Besides, the Federal
Reserve is rolling out FedNOW. There are also other avenues for
users to use cryptocurrencies or even networks such as XRPL by
Ripple Labs. Some users have even compared PayPal’s level of
innovation to what it was in 1999 when Western Union was its
primary competition. Too much competition plus outdated
tech. It's difficult to stay relevant 25 years later. Banks now
have Zelle and even the Fed is rolling out FedNOW, and they suck at
innovation. In 1999 their competition was Western Union charging
you $$$. — Patrick Dehkordi (@PatrickDehkordi) May 12, 2023 Crypto
Holdings Rise In Q1 2023 This is in spite of PayPal announcing a
substantial surge in its cryptocurrency holdings In Q1 2023,
revealing a remarkable 56% increase compared to the previous
quarter. Related Reading: PayPal Co-Founder Says Bitcoin Price
Points To Crisis In The Economy As of March 31, 2023, the company
boasted a total of $943 million in cryptocurrency assets led by
Bitcoin and Ethereum, as opposed to the preceding quarter of $604
million; a significant uptick in its crypto holdings.
Although the payment processor accepts direct crypto purchase, it
bars users from withdrawing them to external wallets. This is a
hindrance and a fact that may also slow down adoption. -Featured
Image From Canva, Chart From TradingView
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