In its second-quarter earnings report, PayPal’s net income dropped 23% year-over-year (YoY), which is partially attributable to “short-term drag” associated with eBay transitioning away from PayPal to its own solution, a shift that’s been underway over the past couple of years.

Why should we care?
The pressure from eBay’s move away from PayPal will likely peak in the current quarter and then begin to wind down, PayPal CEO Dan Schulman said in a call with analysts this week. The effect of “ripping off the eBay band aid” on PayPal was greater than expected, an analyst was quoted as saying, while emphasizing that the company’s strong underlying business. PayPal added 11.4 million net new active accounts in the second quarter, for a total of more than 400 million active accounts. Meanwhile, revenue grew 19% YoY, good news that’s in no small part due to the growth in online shopping during the pandemic period. The company also generated revenue from crypto buy, sell, and hold capabilities that it recently launched. PayPal is on the cusp of launching a “financial super app” including aspects like enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto, subscription management, and “buy now, pay later” functions.