PayPal reported strong earnings and even raised its profit forecast for the year, but it wasn’t enough to please Wall Street. The company’s shares dropped 8% as investors worried more about the future of online spending than the good news of today.
The main concern is slowing growth in PayPal’s core “branded checkout” business—the familiar PayPal button you see on shopping sites. Growth in this area slipped to 5% from 6% in the previous quarter. On top of that, there are broader fears that new tariffs will make online shopping more expensive, causing consumers to cut back. PayPal’s finance chief admitted the company is watching the tariff situation closely and saw a temporary slowdown in payments between China and the U.S. after the tariffs were implemented.
Still, there was plenty of good news in the report. The company’s push to revive growth in its high-margin businesses is starting to work. Venmo, its popular payment app, had a fantastic quarter, with revenue growing 20% and its payment volume hitting a three-year high. This success helped the company raise its profit target for the full year.
Under its new CEO, Alex Chriss, PayPal has been focusing more on profitability than just chasing growth. The strategy is paying off, with key profit margins improving. But for now, the fear of a potential economic slowdown is overshadowing the company’s recent successes.
