The payments giant which was the original source of Elon Musk’s wealth, lowered its forecast for new customers after saying that “bad actors” were taking advantage of its incentives and rewards programs, and is also overhauling its marketing strategy as a result.
PayPal last year began offering its first ever sign-up incentives, handing out as much as $10 to encourage new customers to open an account. But the firm’s risk-management team – which apparently is made up of gullible 19-year-olds who could never anticipate such an outcome – discovered that many of the accounts were being created by bot farms. Shock!
PayPal immediately began closing those accounts and is attempting to recoup the incentives from those customers, a company spokesman said. Good luck with that.
“We regularly assess our active account base to ensure the accounts are legitimate,” CFO John Rainey said during a Tuesday conference call with analysts after the company released fourth-quarter results which missed across the board. “This is particularly important during incentive campaigns that can be targets for bad actors attempting to reap the benefit from these offers without ever having an intent to be a legitimate customer on our platform.”
“Bad actors”, of course, is what you blame when you blow up your entire business model after demonetizing millions of people whose only transgression is disagreeing with you.
The “problem” – which apparently the company was not aware of until just now – was disclosed along with an earnings report that fell well short of Wall Street estimates, sending the shares plunging.
Going forward, PayPal said it will refocus its marketing efforts on increasing usage of its products among active customers.
Meanwhile, the company said low-income customers are spending less as they struggle to keep up with rising prices amid the highest levels of U.S. inflation in decades. Adding insult to cancel culture injury, growth in e-commerce spending also slowed as supply-chain disruptions affected shipping times and consumers did more of their shopping in stores during the holiday season.
The abrupt shift in marketing strategies was a “shocker,” Lisa Ellis, an analyst at MoffettNathanson, said in a note to clients. “You can officially add PayPal to your list of pandemic high-fliers that are experiencing a quite-bumpy landing.” And for confirmation look no further than the company’s stock which has plunged 25% today, its biggest drop on record.
All we can add here is the familiar refrain: “get woke, go broke.”