It is expected that a global pandemic is going to have consequences on the markets and that is exactly what the coronavirus pandemic did with PayPal stocks. This article on the various methods like PayPal is going to examine how this happened and how the impact of the virus on PayPal stocks has been positive even though there were some notable negative impacts.
In December 2019, PayPal made news as the first foreign financial giant to get a license to offer digital payment services in China. This was possible as the company completed the acquisition of the Chinese online payments provider GoPay. Around that period, the pandemic was not much of news as it is now so PayPal stock rose by 14% with the acquisition.
PayPal in a Virus-Ravaged Chinese Market – Good Fortune
But then, the news started filtering in that China was combating the outbreak of a deadly virus. This was about the same time that PayPal was completing its acquisition in China. As expected, this had a direct impact on many businesses, PayPal included. It was a big hit to the Chinese economy and it slowed down with the global economy. Interestingly, the outbreak had a positive effect on PayPal stock because it put tremendous pressure on the major rival of PayPal which is cash transactions.
As a way to cut the rate of infections, China stopped the use of cash in some areas affected by the virus. This is because it is believed that the virus is spread by dirty cash notes. As the risk from cash became more apparent to everyone, more Chinese people decide to go for digital payment as a way to reduce the risk of infection. Considering that PayPal was launching its operations in the country, the news had a positive effect on its stock price.
Horrible Plunge Triggered by Market Anxiety
However, on the 23rd of March, the investors had a scare when a heightened coronavirus pandemic triggered one of the worse sell-offs ever seen for any technology stock. By the 20th of March, the shares of PayPal had fallen by 7.48% and ended up closing for the day at $86.68. Overall, the stock plunged by 21.3% bringing the losses for the month to a cumulative 29%.
PayPal was not the only tech stock affected by the huge sell-off though, others that also got hit included Facebook, Alphabet, and Apple. It was a big deal when PayPal chief executive officer Daniel Schulman decreased his stockholding in the company when he decided to sell 25,000 PayPal shares on the 17th of March. Based on a regulatory filing, he made almost a million dollars from the transaction which he did in series selling the shares for anything between $91 and $101.
Swings in Stock Performance as Top Execs Shed PayPal Stocks
Schulman is the latest major PayPal figure to sell the shares of the brand. As of 7th March, it was noticed that PayPal executives had sold a total of $25 million in PayPal shares in all. The transaction from Schulman was coming one day after PayPal stock had its deepest single-day drop since the beginning of 2019. On the 16th of March, it plunged by 16% – it was a bad day for many American stocks for 2020.
The Rebound Following Trump’s Announcement and Presidential Anxiety
Fortunately, the bad news did not last as PayPal stock rebounded by the 24th of March. By that time, the PayPal stock had already appreciated by as much as 14%. For those who wondered where the surge came from, it was because of the pronouncement of the United States President Donald Trump. He announced very confidently that Americans were going to be able to return to their jobs without delay even with all the outbreak of the coronavirus. Trump was so specific that he stated that he was looking at everyone returning to their jobs in a matter of weeks.
However, it must be mentioned that to the consternation of China, Trump insisted on calling the pathogen Chinese virus. This sparked off a variety of reactions from not just Americans but from all over the globe. Trump could not hide his frustration with the so-called Chinese virus when he stated that the country might be heading for a recession.
Upon this announcement in mid-March, the Dow Jones index closed at 12.9% down with the London-based FTSE 100 ending at four points lower. Overall, it was the worst fall for US stocks since 1987. IAG sustained a loss of 25% while stocks like Chevron, Marathon Oil, Apache Corporation, Exxon Mobil and Diamondback Energy experienced worse or similar losses.
Conclusion – It Has Not Been A Bad Outing for PayPal
Furthermore, this article on the various methods like PayPal has examined things that has happened due to the Coronavirus. While the announcement was a positive jolt to the economy with many businesses including PayPal stock had a massive surge. A quick return to work is going to further favor PayPal stock. This is because if the stay-at-home orders are prolonged more than normal, it is going to affect PayPal stock badly.
This is because the brand makes much of its profits from the processing of digital payment transactions. If people stay at home and cannot work for a long time, their earning power will be greatly affected and they will not be able to spend as much as they used to. However, overall, the coronavirus pandemic has been a mixed bag of news for PayPal stock – with more of it tilting towards the positive.