After peaking at over $300, Paypal’s (PYPL) steady drop to around $200 should concern fintech investors. Financial services fell, too, but by less than PayPal’s drop. Similarly, DocuSign (DOCU) forecasted slower growth. The post-pandemic market is shunning businesses that rely on online transactions.
Investors should avoid holding too much PYPL stock. Visa (V) and Mastercard (MA) are more compelling. Customers will know by experience that paying by PayPal can offer a terrible experience. For example, reversing a transaction because the merchant did not deliver is difficult on PayPal. People need to email customer support and wait for months before getting a reply.
Visa and Mastercard invested heavily in anti-fraud and on protecting customers. Customers will prefer to pay by credit than to use PayPal. Also, PayPal’s fees are very high. This is another reason to question the firm’s growth prospects.
DocuSign faces a slowdown, too. The stock is trading at half the price for a reason. Markets adjusted for a slowdown in 2022. Speculators could buy DOCU or PYPL stock as a rebound play. This is a trade, not an investment. Once the rebound plays out, speculators may sell to book the profit.
Market sentiment is weakening. Be wary of companies that are no longer growing at historical rates.
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