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PayPal

PayPal Plunging Despite Increasing Crypto Holdings

Dalmas Ngetich by Dalmas Ngetich
3 weeks ago
in Cryptocurrency Market News
Reading Time: 2 mins read

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are not explicitly stated, speculation suggests that the company is facing a combination of intense competition and outdated technology.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.

Bitcoin Price On May 13| Source: BTCUSDT On Binance, TradingView
Bitcoin price on May 13 | Source: BTCUSDT On Binance, TradingView

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
Tags: bitcoincryptoethereumpaypalsharestrading
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Dalmas Ngetich

Dalmas Ngetich

Dalmas is a crypto reporter covering NFTs, blockchain, DeFi, and blockchain news for NewsBTC. He’s part of a team of talented team working on bringing latest crypto development across the board. Dalmas is also the ex-founder of btc-pulse.com, a crypto news outlet. Dalmas has over 10 years of experience covering Forex, general finance, technology, and blockchain developments. His work and that of his partners has been featured in top news outlets including investing.com, CoinTelegraph, Entrepreneur, Forbes, and other authority sites. He’s passionate about technology and politics. When he’s not keeping tabs on crypto events, you’ll find him out in nature, exploring and traveling with family and friends. You can follow Dalmas on Twitter @Dalmas_Ngetich or ping him on Telegram @Dalmas_Ngetich

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