The stock market has gotten increasingly volatile lately, and the Nasdaq Composite (NASDAQINDEX:^IXIC) has been the focal point for many investors. After pushing to a nearly 1% gain early on, the Nasdaq fell into negative territory briefly before posting gains of around 0.25% at 2:30 p.m. EDT.
There were several countervailing trends affecting the Nasdaq on Wednesday. Helping to lift the index was PayPal Holdings (NASDAQ:PYPL), which has benefited dramatically from the trends pushing fintech forward so far in 2020. First, though, Netflix (NASDAQ:NFLX) wasn't as fortunate, as investors reacted negatively to its latest financial results.
Losing the stream
Shares of Netflix fell more than 6% on Wednesday. The stock reacted negatively to news the streaming video giant released late Tuesday about its third-quarter financial results.
Plenty of what Netflix had to say was positive. Revenue was higher by 23% from year-earlier levels. That helped boost net income by 19% year over year.
Yet investors honed in on a couple of more troubling trends. Netflix added just 2.2 million net paid memberships during the quarter. That was far below the 10.09 million it brought in three months ago and the 15.77 million net additions from the first quarter of 2020. Average revenue per user was also down, due largely to adverse foreign exchange moves.
Netflix had warned shareholders that its growth from the first half of 2020 wouldn't be sustainable, but the slowdown was more abrupt than anticipated. Moreover, with the company getting a cash-flow bump from not spending as much on content production during the COVID-19 pandemic, investors need to brace for a big jump in future expenses. That doesn't change Netflix's long-term prospects, but it does change the narrative from what the company has seen this year.
PayPal rakes in the coin
Meanwhile, PayPal Holdings saw its stock move the other way, climbing 6%. The electronic-payment network made an announcement that will put it squarely into the cryptocurrency arena.
PayPal will give platform participants the ability to buy and sell bitcoin and other cryptocurrency tokens on its network. Moreover, customers will be able to use their crypto wallets to pay for items the same way they use PayPal to pay merchants in U.S. dollars and other currencies.
One thing PayPal's press release didn't highlight were the fees it will charge for the service. Each purchase or sale of bitcoin and other cryptocurrencies will cost between 1.5% and 2.3% of the transaction amount depending on size, with a minimum $0.50 fee. That doesn't include a cryptocurrency conversion spread that will apply to stated exchange rates.
With the move, it's clear that fintech companies are looking to find ways to preserve their fee income while still embracing the popularity of bitcoin. That's not entirely consistent with the goal of cryptocurrency creators, but if it means more profits for PayPal, then shareholders should be pleased with the move.