PayPal Gains $4 Billion in Market Value, Discloses SEC Subpoena
Berlin, Germany – PayPal Holdings added nearly $4 billion to its market value after announcing plans to become “leaner,” which fired up investors. However, the payments giant also disclosed a subpoena from the U.S. Securities and Exchange Commission (SEC) tied to its stablecoin.
On Thursday, PayPal’s shares closed nearly 7% higher at $55.06, driven by a strong full-year profit forecast. The company’s new CEO, Alex Chriss, stated that PayPal’s cost base remains too high, and the company will align its resources to its most profitable growth priorities. This pledge reassured investors and eased concerns about a potential spending slowdown.
Analysts responded positively to Chriss’ statements. J.P.Morgan analyst Tien-tsin Huang said that Chriss “articulated well the challenges facing the company and described a sound framework for improving growth and profitability.” Brokerage William Blair also expressed encouragement by management’s narrowed focus on profitable growth.
PayPal’s peer, Block, also saw a 7.4% increase in its shares following the positive news.
However, alongside the positive developments, PayPal announced that it received a subpoena from the SEC’s Enforcement Division, requesting the production of documents. The subpoena indicates that the regulator is intensifying its scrutiny of the cryptocurrency industry, even after losing a high-profile court case against digital asset manager Grayscale Investments.
PayPal assured that it is cooperating with the SEC, but the news highlights the increasing pressure on stablecoins. Stablecoins are cryptocurrencies whose value is tied to a stable asset, protecting investors from price volatility.
In August, PayPal became the first major financial technology firm to embrace digital currencies for payments and transfers when it launched its dollar-backed stablecoin.
Separately, PayPal named Archie Deskus as its new chief technology officer, following the recent appointment of Jamie Miller as its finance chief.
The company’s positive performance and growth plans have driven investors’ confidence in the firm’s future prospects. As consumers’ financial health remains robust, PayPal appears well-positioned to capitalize on ongoing spending trends.
Niket Nishant in Bengaluru contributed to this report.
Note: The Reuters News Standard Principles apply to this article.