Why Did PayPal Holdings' Share Price Drop Nearly 9% Last Week?
Major Points
- The last week of June saw a lot of unhappiness in the stock market.
- Paypal stock news
What took place
After having a dreadful first half of 2022, PayPal Holdings' (PYPL, 2.23 percent) shares were down 8.5 percent last week. In fact, the first half of this year has officially been the worst since 1970. The S&P 500 and Nasdaq Composite indices are down 20 and 29 percent, respectively. PayPal shares, on the other hand, had lost 62 percent of their value this year as of the close of business on July 1. Ouch!
What then?
In the last week, there was no specific news that affected PayPal. But because of how equities reacted to the U.S. Federal Reserve's raising its short-term interest rate by 0.75 percent, the entire month of June was bad. Risky investments, such as equities, typically depreciate when interest rates rise.
However, due to a sharp slowdown in growth, PayPal has been in a downward spiral all year. E-commerce spending has changed significantly since the economy was in a boom period. The fintech is still growing as it progressively increases its user base and popularizes its apps like Venmo as a means of payment, but it is obvious that the corporation ignored warning signs that its skyrocketing financials were about to slow down. The stockholders are unhappy.
So what?
For better or worse, the Fed is anticipated to raise interest rates once more at its upcoming meetings in September and July as it carries on its war against inflation. It goes without saying that bringing commodity prices under control is a critical priority for the long-term health of the economy, but in the meanwhile, equities like PayPal are suffering.
Pypl stock
PayPal is currently at its lowest price since 2015, when it split from eBay (EBAY 2.93 percent). Just 17 times trailing-12-month free cash flow and 18 times current-year anticipated earnings are currently being paid for shares. Investors must now decide if they think PayPal can overcome this roadblock in the digital economy and continue its growth. Although there is fierce competition in digital payments, PayPal also has some of the most well-known apps available. This could be a great buy among fintech stocks right now if the company does manage a comeback later this year or next.
ALSO READ: