Online payments giant PayPal is not expected to experience significant repercussions from a customer backlash regarding a purported charge for users disseminating misinformation, according to financial analysts.
The controversy arose from a statement issued by PayPal Holdings earlier this week, suggesting that users could face fines of up to $2,500 for publishing misinformation. This policy change, which was later retracted, initially led to dismay among Twitter users, prompting calls for a boycott of the company. Within hours, searches for “Delete PayPal” began trending, and the company’s share price dropped by 7.9% over Monday and Tuesday.
However, analysts have dismissed concerns about a mass exodus of customers or any long-term impact. Trevor Williams, senior vice president at broker Jefferies and a fintech/payments equity research expert, noted that only 70,000 users had engaged with posts calling for the app’s removal. Furthermore, it remains unclear how many of the nearly 400 million consumer accounts were actually deleted.
Williams stated in a report to clients, “If the reaction from consumers is limited to those voicing discontent on social media, we do not anticipate a significant effect on net new active accounts.” Other analysts have continued to support PayPal, with Bank of America analyst Jason Kupferberg naming it as his “top pick” in a report to clients.
This situation raises questions about the effectiveness of social media campaigns and boycotts in influencing share prices or user bases. According to Williams, the “only lingering risk” for PayPal would arise if the controversy leads to a politically motivated boycott, the likelihood of which is difficult to assess.
The backlash was somewhat mitigated by a statement from PayPal, acknowledging that the original message regarding misinformation charges was incorrect and apologizing for any confusion.
Despite this, PayPal has faced a challenging year, with its share price halving over the past 10 months due to missed post-pandemic growth targets. Additionally, the company may encounter further backlash over its actions in Hong Kong, where it terminated the account of one of the last remaining pro-democracy groups, the League of Social Democrats, citing “excessive risks.”
Avery Ng, the league’s former chairman, expressed to VOA News that the group feels “helpless” regarding the decision. “The political situation and pressure cause corporations to stop providing even basic normal services to opposition parties, further hindering basic fundraising activities,” said Ng, who was recently released from a 12-month prison sentence.
He added, “We received no warning or further explanation, just instructions on how to withdraw the remaining funds from the account. They need to provide us and the public with a clear answer. PayPal is a vital tool for our online fundraising, and their unexpected and unexplained action undermines our efforts to raise funds for our court cases in an already struggling environment.”