When investors were enthused by PAYPAL’s promise to become “leaner,” the payments giant announced a subpoena from the US Securities and Exchange Commission (SEC) related to its stablecoin, and its market value increased by about US$4 billion.
The company’s shares increased by about 7% to US$55.12 on Thursday, Nov. 2, as investors’ concerns over a slowdown in expenditure were allayed by a robust full-year profit estimate.
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The company’s new CEO, Alex Chriss, stated on Wednesday that “our cost base remains too high” and that PayPal will allocate its resources to its “most profitable growth priorities.”
PayPal Stock Soars with ‘Leaner’ Approach, Crypto Worries Eased,PayPal Stock Soars with ‘Leaner’ Approach, Crypto Worries Eased
The optimistic prediction highlighted how consumers’ financial health is strong, enabling them to continue their buying spree despite the unpredictability of the economy.
According to JPMorgan analyst Tien-tsin Huang, “Chriss struck the right note and articulated well the challenges facing the company and described a sound framework for improving growth and profitability.”
Additionally, William Blair, a broker, expressed encouragement over management’s “narrowed focus on profitable growth.”
SEC increases its pressure on cryptocurrencies
The SEC’s subpoena suggests that, despite recently losing a high-profile legal battle against digital asset management Grayscale Investments, the agency is continuing to exert pressure on the bitcoin market.
PayPal stated that it was assisting the SEC’s Enforcement Division with the subpoena, which requested the provision of documents.
Stablecoins are cryptocurrency tokens that are backed by a steady asset, so shielding investors from volatile market fluctuations.
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When PayPal introduced its US dollar-backed stablecoin in August, it became the first significant financial technology business to accept digital currencies for transfers and payments.
A day after appointing Jamie Miller as the new finance head, the business also selected insider Archie Deskus as its new chief technology officer on Thursday.
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