February 1 (Reuters) – PayPal Holdings Inc (PYPL.O) Wall Street analysts warn of tough years ahead, need to cut more costs as payment volumes are expected to fall as customers break through hatches to prepare for a potential recession said that there is
The San Jose, Calif.-based digital payments company announced Tuesday it will lay off 7% of its workforce, or about 2,000 employees.
PayPal has been under pressure for most of last year as fears of sharp inflation and recession restricted digital payments and e-commerce spending.
Morningstar analyst Brett Horn said the improvement in margins could partly be due to pressure from activist Elliott Investment Management, which has become a management focus over the past year. This seems like another step in that direction.
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Some analysts suspect the latest job cuts came under pressure from Elliott, who acquired a stake in the company in August.
Horn says PayPal still has the potential to “improve its margins significantly over time” and has room to cut costs further.
The company lowered its annual revenue growth forecast when it reported third-quarter results in November.
Investors have little reason to be bullish on PayPal’s medium-term growth as demand continues to soften, analysts at Jefferies said in a memo.
The company’s shares fell 0.3% in premarket trading on Wednesday.
Reported by Niket Nishant, Bangalore.Edited by Shinjini Ganguly
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