San Jose-based digital payments company PayPal Holdings Inc. announced a revision to its second-quarter operating margin forecast on Wednesday, causing shares to drop by more than 7%. The company now expects its operating margin to be lower than previously anticipated, due to higher-than-expected expenses associated with its recent acquisitions and strategic partnerships.

PayPal is one of the world’s largest digital payment platforms, with over 400 million active user accounts in more than 200 markets worldwide. Its platform allows users to send and receive payments, make purchases online, and manage their financial accounts from a single location. The company has been on an acquisition spree in recent years, acquiring companies such as Honey Science Corp., iZettle, and Venmo.

However, PayPal’s latest financial update suggests that its recent acquisitions and partnerships are taking a toll on its profitability. The company now expects its second-quarter operating margin to be around 16%, down from its previous forecast of 22%. The revision is due to a combination of higher expenses and a shift in product mix, according to PayPal.

The news sent shockwaves through the financial world, causing PayPal’s shares to drop by over 7% in after-hours trading on Wednesday. The drop wiped out more than $20 billion from the company’s market value, according to data from Refinitiv.

The announcement comes amid a broader period of uncertainty in the financial markets, as investors grapple with concerns over inflation and the impact of the COVID-19 pandemic. PayPal’s shares have been particularly volatile in recent months, as investors weigh the company’s growth potential against rising competition from newer digital payment platforms.

PayPal’s CEO, Dan Schulman, sought to reassure investors in a statement on Wednesday, saying that the company remained focused on its long-term growth strategy despite the revision to its margin forecast.

“We continue to execute against our strategy, and I remain confident that we are well-positioned to capture the significant opportunity in front of us,” Schulman said.

The company also announced that it had completed its $4 billion acquisition of digital asset custody firm Curv, which it first announced in March. The acquisition is expected to strengthen PayPal’s position in the growing market for digital currencies and blockchain technology.

Despite the challenges facing PayPal in the near term, many analysts remain bullish on the company’s long-term prospects. The shift to digital payments is expected to continue to accelerate in the years ahead, as consumers increasingly turn to online shopping and contactless payments. PayPal’s strong brand recognition and global reach could make it well-positioned to capitalize on this trend.

However, the company will need to navigate a complex and rapidly evolving market, as competitors like Square and Stripe continue to gain market share. In addition, PayPal will need to demonstrate to investors that it can manage its expenses and maintain profitability in the face of increasing competition.

The revised margin forecast is a setback for PayPal, but the company’s long-term prospects remain promising. As the digital payments landscape continues to evolve, PayPal will need to stay agile and innovative in order to remain competitive and meet the changing needs of its users.