While most companies struggled during the pandemic, digital-payment companies including PayPal thrived as consumers were forced to depend more on online transactions.

PayPal’s revenue, for example, shot up from $17.8 billion in 2019 to more than $25 billion in 2021. Shares of the company also saw new heights during that period.

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“That traditional retail volume moved to venues and forums where PayPal was prominently displayed and in turn led to outsized growth from a volume perspective over that year and a half,” said Andrew Bauch, a senior equity research analyst at Sumitomo Mitsui Banking Corp.

But as pandemic restrictions began to ease, PayPal’s stock growth started to fall off. Within just a year, it would lose all the gains it had made amid the pandemic through a series of disappointing earnings reports.

“A lot of investors and PayPal themselves thought that the e-commerce growth was going to continue to grow at really significant levels,” said Dominick Gabriele, an executive director and senior analyst at Oppenheimer & Co.

At the height of the pandemic, e-commerce sales accounted for 16.4% of total retail sales in the U.S. Since then, the growth has largely slowed down, remaining under 15% the past two years.

“As the lockdowns subsided, people went back to in-person spending,” explained Gabriele. “Some people, believe it or not, even went back to cash.”

And while PayPal’s total payment volume has seen continuous gains, its stock growth has slowed, with rising competition in the digital-payment space being a major contributing factor.

“There’s a positive and a negative to the fact that PayPal is so focused on e-commerce,” said Brett Horn, an analyst at Morningstar. “The positive, obviously, is that it’s a high growth area and that benefits them over time. The negative is that that’s where a lot of the fintech innovation is centered around and a lot of the investment is going after that space because it is the highest growth space.”

PayPal declined to comment for this report, but during its 2022 third quarter earnings report, CEO Dan Schulman commented that “while there are a number of unknowns regarding the macro environment, we can largely control our spend and its implication on earnings growth.”

Watch the video to find out more about how Paypal makes its money and why it has been struggling in recent years.