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The
San Jose, California-based digital payments company said on
Tuesday it would lay off 7% of its workforce, or around 2,000
employees, a move in line with analyst expectations and the
firm's previous commitment to rein in costs.
PayPal has been under pressure for most of last year, as surging
inflation and fears of a recession limited digital payments and
e-commerce spending.
"Improving margins has increasingly been a focus for management
over the past year, possibly in part due to pressure from
activist Elliott Investment Management, and this looks like
another step in that direction," Morningstar analyst Brett Horn
said.
Some analysts suspect the latest job cuts were under pressure
from Elliot, which took a stake in the company in August.
PayPal still has potential to "meaningfully improve margins over
time," Horn added, indicating the company has further room to
cut costs.
The company cut its annual revenue growth forecast when it
reported its third-quarter results in November.
As demand continues to soften, there is little reason for
investors to be bullish on PayPal's growth in the medium term,
Jefferies analysts said in a note.
Shares of the company dipped 0.3% in premarket trading on
Wednesday.
(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini
Ganguli)
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