When PayPal (PYPL) reported quarterly results, investors dumped the stock. Prospects are so dire that the fintech is reportedly exploring the sale of Xoom.
Margins are shrinking. The early adapter of electronic and digital payments already faces severe competition. It cannot grow without introducing more referral programs and spending more on advertising. Competitors with lower operating costs will grow their market share at PayPal’s expense.
PayPal said its 2023 operating margin will fall by at least 100 basis points. Operating costs will fall in Q3 and Q4. The cost savings will give competitors a chance to take PayPal’s customers.
Apple (AAPL) is the giant entering the fragile fintech sector. Its offer of 4.15% APY is a game-changing move. It encourages iPhone users to deposit more funds in the Wallet app.
PayPal’s luxury of charging users higher fees and more costs is at an end.
Block (SQ) posted revenue growing by 26%, earning it 40 cents a share. Macroeconomic headwinds will slow transaction volumes, weakening Block’s revenue growth.
SQ and PYPL stock are cheap for a reason. The industry is maturing. Competition is heating up, especially after Apple entered the market.
Exercise caution before considering buying the stock on the dip. The stock could get cheaper from here.
