PayPal shares fall after payments giant reports shrinking profits measure

Company said it had increased losses in it business loan portfolio

PayPal still employs about 2,000 people in Ireland, at bases in west Dublin and Dundalk despite recent rounds of large job losses.

Shares in PayPal fell a day after the payments giant said a key measure of profits shrank and as the company had to set aside more money to cover souring loans it has made to US retailers. 

PayPal still employs about 2,000 people in Ireland, at bases in west Dublin and Dundalk, despite recent rounds of large job losses. 

PayPal’s adjusted operating margin narrowed to 21.4% in the second quarter from 22.7% in the first three months of the year, the California-based company said in a statement on Wednesday night. That came as the company tightened underwriting standards for loans it has made to retailers in recent months.

“We saw some increased losses in our PayPal business-loan portfolio,” chief executive Dan Schulman said in an interview. “We put a provision in for our losses and I expect that to be a temporary blip across results.” 

In recent years, PayPal has expanded its loan offerings for the millions of US retailers that process payments across the firm’s many platforms, and these days the company offers business and working-capital loans. 

The increased provisions come as investors have grown increasingly concerned about pressure on PayPal’s margins. That is because the company continues to invest in its unbranded-payments technology and shareholders fear business is less lucrative than the branded PayPal checkout products. 

However, spending growth on PayPal’s platforms accelerated in the second quarter as consumer confidence continues to soar amid moderating inflation. 

Total payments volume rose 11% to $376.5bn (€344.5), faster than the 10% growth the company posted in the first three months of the year, as PayPal benefited from the ongoing strength of US consumers and their increased willingness to travel and spend more in the aftermath of the pandemic. 

• Bloomberg