PayPal Stock: Is Now the Time to Buy?
PayPal’s (NASDAQ: PYPL) growth has significantly slowed, leaving investors questioning whether the current stock price represents a genuine opportunity or a justified discount. The stock has declined by over 40% in the past year, weighed down by cooling sales, macroeconomic challenges, and increased competition. But should investors consider buying PayPal’s stock before its upcoming earnings report on May 5th?
Image source: PayPal
A Look Back at Ambitious Goals
In 2021, PayPal set an ambitious target of reaching 750 million active accounts by the end of 2025. However, this goal was later abandoned. The total number of year-end active accounts only increased from 426 million in 2021 to 439 million in 2025. This slowdown is attributed to inflationary pressures impacting consumer spending, as well as fierce competition from other digital payment and fintech platforms. The end of its agreement with eBay (NASDAQ: EBAY) between 2018 and 2023 also contributed to the pressure.
Recent Performance: A Mixed Bag
The following table summarizes PayPal’s key metrics:
| Metric | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |
|---|---|---|---|---|---|
| Active Accounts Growth (YOY) | 2% | 2% | 2% | 1% | 1% |
| TPV Growth (YOY) | 7% | 3% | 6% | 8% | 9% |
| Payment Transactions Growth (YOY) | (3%) | (7%) | (5%) | (5%) | 2% |
| Transaction Take Rate | 1.73% | 1.68% | 1.68% | 1.64% | 1.65% |
| Revenue Growth (YOY) | 4% | 1% | 5% | 7% | 4% |
Data source: PayPal. YOY = Year-over-year.
Over the past year, PayPal’s revenue growth has been in the low-to-mid single digits, struggling to attract new customers, increase transaction volume, and improve its transaction take rate. The company is increasingly reliant on its branded checkout platform, Venmo, debit cards, and Buy Now, Pay Later (BNPL) services, which generate higher average payments but fewer total transactions compared to its other services.
Strategic Shifts and Cost Cutting
PayPal is strategically downsizing its Braintree backend payments platform to stabilize margins and take rates. Simultaneously, the company is implementing cost-cutting measures and repurchasing shares to boost earnings per share (EPS) as sales growth slows. However, PayPal anticipates a mid-single-digit decline in EPS for 2026 due to challenges in growing its branded checkout platform in a competitive market.
The Bottom Line: A Cautious Approach
At a price of 8 times this year’s earnings, PayPal’s stock appears undervalued and could potentially attract acquisition interest from larger financial institutions or tech companies. However, a cautious approach is warranted. Investors should look for further positive indicators before considering a contrarian investment.
As The Motley Fool suggests, exploring other investment opportunities might be prudent. Their Stock Advisor service has consistently outperformed the market, identifying stocks with significant growth potential. Learn more about The Motley Fool Stock Advisor here.
Disclaimer: Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal and eBay. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy. All market data is provided by Barchart Solutions.
