What happened
PayPal (PYPL 2.17%) climbed on Thursday, extending a rally in the digital payments company's shares since it announced a cost-cutting plan earlier this week. As of 2:50 p.m. ET, PayPal's stock was up more than 4%.
So what
PayPal said Tuesday that it would lay off roughly 2,000 employees. The job cuts equate to about 7% of the fintech giant's total workforce.
"Over the past year, we made significant progress in strengthening and reshaping our company to address the challenging macro-economic environment while continuing to invest to meet our customers' needs," CEO Dan Schulman said in a message to employees. "While we have made substantial progress in right-sizing our cost structure, and focused our resources on our core strategic priorities, we have more work to do."
PayPal's revenue rose by 11% year over year to $6.85 billion in the third quarter. Yet its adjusted earnings per share fell by 2%, to $1.08, as higher costs weighed on its profit margin.
The e-commerce company's pace of expansion had decelerated as the growth of the online retail market has slowed. At the same time, inflation and other cost pressures are denting its profitability. PayPal is thus aggressively cutting costs to better withstand the slowdown and preserve its margins.
Now what
Meta Platforms' fourth-quarter financial results likely also provided a boost to PayPal's stock on Thursday. Facebook's parent company delivered stronger-than-expected revenue and issued an upbeat sales forecast.
Facebook's digital advertising sales are tied closely to the health of the e-commerce market, so Meta's Q4 performance bodes well for PayPal's upcoming results. The digital payments leader is slated to release its fourth-quarter earnings report on Feb. 9.
