PayPal went all out on crypto in 2021, building a wallet and touting big plans for its Venmo and core payment unit. But the company was conspicuously silent on crypto on Tuesday, barely mentioning the technology during its second-quarter earnings call.
The earnings announcement was largely bullish after it announced a $15 billion share buyback program and activist investor Elliott Investment Management was now one of its main shareholders. These developments, along with PayPal beating analysts’ expectations, saw the share price soar 14% in after-hours trading.
This is a welcome turnaround for shareholders as the company, which was struggling to maintain the momentum it enjoyed during the pandemic, had lost 54% of its stock market value since the start of the year.
Tuesday’s PayPal revenue is also included the appointment of a new financial director, but crypto has taken a back seat. In a press release, the company noted that it has launched crypto transfers between PayPal and other wallets and exchanges and added free sending and receiving to family and friends on PayPal in the United States.
The crypto has been hammered so far in 2022 with the most popular cryptocurrency, Bitcoin, down around 50% since the start of the year and the second most popular crypto, Ether, down about 55%. Although both cryptocurrencies got a boost from the Federal Reserve rising interest rates by three-quarters of a percentage point in the past week, the two most popular cryptocurrencies are down about 66% from their highs of last November.
Instead of laying out the company’s crypto strategy, Schulman simply said on the earnings call that “digital wallets are the future,” adding that the company is doubling down on this area of the business, what was first introduced in 2021.
“We’re seeing some, really, quite a bit of adoption, quite a bit of reduction in churn for those who come in. So we’re going to continue to invest there,” he said.
Despite the lack of mention, a PayPal spokesperson said the company’s stance on crypto hasn’t changed.
“Cryptography continues to be a strategic priority for PayPal and was referenced in the Strategic Initiatives and Business Updates section of our release as such,” the spokesperson said. Fortune in an email.
The focus on digital wallets is one of three things that have been prioritized as PayPal cut spending in areas like marketing and headcount and trimmed its focus, as Schulman pointed out during the talk. call for results. In addition to digital wallets, Schulman also highlighted two other areas of the company as priorities: payment, PayPal’s core business, and Braintree which allows merchants to customize their shopping carts and integrate them. to their own platforms.
Schulman also said the company is stepping back in other areas, including a plan to offer stock trading on its platform that CNBC reported that the company was exploring last year. The company created a division called Invest at PayPal last year to lead the effort, according to CNBC, but on Tuesday Schulman said the company had changed direction.
“We were going to focus on Investing this year, like stock trading, that sort of thing. We’re not going to do that,” Schulman said. “We reallocated these staff to the checkout, we were also able to reduce the staff. We don’t have the same regulatory footprint that we thought we had. »
Although PayPal has reaffirmed its commitment to crypto at this time, it is unclear whether the company’s shifting priorities and pressure from activist investor Elliott will change things for crypto in the future.
PayPal reported second-quarter revenue of $6.8 billion on Tuesday, slightly above the $6.78 billion expected by analysts, according to Factset. It also came in at $0.93 per share, beating the $0.87 expected by analysts. On Wednesday, PayPal stock had risen about 9.7% to $98.40.
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