For much of 2020 and 2021, PayPal was an investor favorite. The migration to online shopping over the course of the pandemic boosted its transaction volumes and profits, sending its market capitalization higher than all U.S. banks except JPMorgan Chase & Co.

Investor sentiment started to sour after coronavirus lockdowns eased and in-store sales recovered. In October, news of a potential deal to buy the social-media company

Pinterest Inc.

sent PayPal shares even lower. The stock is now trading at its lowest level since May 2020. PayPal’s market value, which topped out at $362 billion on July 23, stood at about $156 billion on Wednesday.

Executives said a number of forces will pressure its business in 2022. Some are unique to PayPal; the company expects to pay a higher effective tax rate this year, and it is losing business from onetime corporate parent

eBay Inc.

faster than expected. Executives also said macroeconomic factors—the runoff in government stimulus, labor shortages, the Omicron variant, inflation and supply-chain problems—are putting pressure on its growth.

The gloomy tone of PayPal’s macroeconomic outlook stood in contrast to the upbeat projections from other payments companies in recent weeks.

Visa Inc.

raised its earnings guidance and cited only a modest impact on domestic payments due to the Omicron variant.

In a surprise to analysts and investors, PayPal abandoned a target it established last year of roughly doubling its active user base to 750 million accounts. Chief Executive

Dan Schulman

said the focus now is on getting frequent PayPal users to use its services more often and not on pursuing customers that are unlikely to transact with PayPal regularly.

As recently as November, PayPal reaffirmed the long-term target and said it expected to add 55 million accounts during 2021. On Tuesday, it said it only added about 49 million accounts last year.

A review of PayPal’s marketing effectiveness found that spending on incentives to attract new users had a lower return on investment than campaigns that tried to get existing users to use PayPal more often, Chief Financial Officer

John Rainey

said on an earnings call. The company also disclosed that about 4.5 million accounts were “illegitimately created” only to take advantage of incentives.

“The abruptness of this change in user strategy gives us the biggest cause for concern,” wrote Bernstein analyst

Harshita Rawat.

“While it is prudent to not continue to spend money on low-value users, we were surprised that this was not evaluated exhaustively before.”

MoffettNathanson analyst

Lisa Ellis

wrote in a research note: “You can officially add PayPal to your list of pandemic highfliers that are experiencing a quite bumpy landing.”

PayPal’s earnings report dragged down the stock prices of other e-commerce and digital-payments companies that got a boost during the pandemic. Shares in

Shopify Inc.

,

Block Inc.

, formerly known as Square, and buy-now-pay-later company

Affirm Holdings Inc.

each closed down around 10%.

For 2022, PayPal expects to generate adjusted earnings per share of roughly $4.67, below the $5.21 consensus estimate of analysts polled by FactSet. PayPal forecast revenue growth of 15% to 17%, less than the 18% growth the company released a few months ago, which investors then viewed as a disappointment.

“Our medium-term targets simply did not contemplate inflation at a 40-year high and supply-chain issues not seen in my lifetime,” Mr. Rainey said on the earnings conference call. “As such, 2022 is now off to a slower start than we previously anticipated, and we are taking a more conservative stance on the year.”

Write to Peter Rudegeair at peter.rudegeair@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com