PayPal is joining a long list of tech firms focused on saving money and cutting unnecessary costs. The online payment system recently announced a goal to save up to $900 million for the rest of 2022 by employing various cost-cutting methods.
It is considered that the decision was made as a result of pressure from activist investor Elliott Management. The investment management firm has a $2 billion stake in PayPal, with the two sides recently entering into an information-sharing agreement.
PayPal’s efforts to cut down on spending will include real estate consolidation, project cutbacks, and layoffs. The company’s job cuts, which have been already underway, are projected to save the company up to $260 million this year alone. However, there have also been significant costs related to this activity, with PayPal spending $71 million on layoffs and restructuring in Q2. An additional $15 million is expected to be spent on job cuts and restructuring activities moving forward.
The news about PayPal’s plans has been well received by investors. The company’s shares jumped 9.25% on Wednesday, closing at $97.92 per share. And many analysts, including Wells Fargo’s Jeff Cantwell, believe this is just the beginning.
“We think shares go higher given the significant changes being made by management, which we expect will positively impact PayPal going forward,” Cantwell told clients in a note shared on Tuesday.