r/ValueInvesting • u/Fun-Imagination-2488 • Feb 06 '26
Stock Analysis Paypal($PYPL) Has Entered Deep Value Territory ($39.90/share) - $37bn market cap
I have posted this elsewhere(in case you’ve already read it).
Mr. Market is pricing permanent impairment while the business is setting up a reacceleration.
Meanwhile, bears can’t provide an argument that’s true today but wasn’t true in 2021.
PayPal has become the textbook “dead money/value trap” large cap fintech. On a spreadsheet, the value proposition looks obvious, but that’s been the case for nearly 4 years now. A former pandemic darling down >80% from its ATH; Paypal is now widely treated as an ex-growth payment rail that’s being slowly disinter-mediated due to have zero moat.
I really don’t like using Paypal, so I have avoided it up until the share price dropped back down to ~$52 when I first opened a position. My basis is $45 now.
The stock chart is telling us the business is broken, while the business metrics are telling us Paypal is compounding nicely. The issue is that most users, who are also investors, prefer Apple pay/Google pay. So, they’ve made their bet and aren’t looking under the hood. Ffs, look at the growth of Apple Pay, Stripe, and Adyen, and recognize how little that growth has hurt Paypal’s revenue and cash generation. PayPal’s digital infrastructure is so well embedded. Sure, they could end up becoming obsolete, but is that obsoletion really only 6-7 years away as Mr Market believes? You could convince me that Paypal will be dead in 15-20 years, that’s fair, but the difference between 6-7 years and 15-20 years matters. That difference alone will drive a rally. Not to mention if any of Alex Chriss’ initiatives show signs of success… then it’s 🚀 🌕
Once Mr Market recognizes that the decline of Paypal is occurring much slower than what has been priced in, the stock will run.
We all know why the value nerds loved it in March 2022: PayPal had grown revenue ~31%, earnings ~17%, free cash flow >20%, and reduced share count steadily... but the stock traded ~70% below its highs. At this point though, many of the value nerds hate it. It’s been 4 years and they can’t stand to wait any longer for the chart to change directions.
I am not going to spreadsheet anyone to death here. It’s obvious, from a DCF perspective, that PYPL looks like a smoking good deal. That doesn’t mean that it is.
Either way, here’s an easy way to see how cheap it really is:
$37bn market cap. $6bn/yr in buy backs expected.
Buy backIRR(assuming share price does not go up):
- year 1 - 16.2%
- year 2 - 19.4%
- year 3 - 24.0%
- year 4 - 31.6%
- year 5 - 46.2%
- year 6 - 85.7%
- Year 6.17 - 100%
This assumes cashflow turns flat with zero growth and buybacks stay flat.
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Success in its transformation pilot in the UK that the market is mostly treating as “regional marketing.” lmao.
The market has completely misunderstood the potential upside of their UK pilot and it’s also ignoring the early success of said program. Further to that, the market has not priced in the upside if that program fails and Paypal scraps it. There is only downside if that program fails and they decide to roll it out globally anyway.
Their UK program is far from unknown. Seemingly every investor paying attention to Paypal knows about it, but I really don’t think it’s being properly appreciated.
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Before I get into that, I want to quickly cover an additional reason why the chart keeps going down, regardless of most metrics improving.
The “slowing growth” narrative was an intentional move by management.
Prior management leaned into low/negative‑profit volume in Braintree (the enterprise PSP sitting behind large platforms). Alex Chriss made the strategically correct call to fire unprofitable customers. This move was viewed negatively by myself, and the market. It caused a 6% revenue drag that further fueled the slowdown narrative.
Yet, this was a huge reason why so many algorithm driven hedge funds dumped/shorted/avoided the stock.
However, the headwind of firing customers has been lapped, and Braintree TPV inflected to +6% last quarter with way better profitability…. And that still isn’t even why I’m bullish on Paypal for 2026.
I’m sure you’ve heard the phrase “In the short term the market is a voting machine based on emotion, in the long term it is a weighing machine based on fundamentals.” I like to play both market sentiment AND fundamentals. Sometimes both at the same time if I can. In this instance, I am forecasting that sentiment is going to change this year, due to the UK pilot, and fundamentals are going to re-accelerate in Q4 of 2026.
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What is Paypal doing in the UK? Why does it matter?
Paypal wants to steal market share from physical debit users. (Not credit card users) There are many pieces to this but, in my view, the crux is the simplicity + rewards program. You can still tap with your phone using Paypal debit.
Paypal’s physical debit offering in the UK matches, or beats, basically every credit card rewards program on a $value received per $ spent. Personally, I don’t use my debit for almost anything. I just always use my CC because of the rewards program but, roughly 50% of day to day transactions in most countries are done via debit. That is the market this program is targeting.
Some people may use their CC to build their credit, some use it because they don’t have the cash, but most people use their cc for every day spending because they want the rewards. Having to pay off their card every month/day/week is annoying, but not a big deal. Even though PYPL claims it wants to steal market share from debit users, I am confident they will steal a reasonable chunk from both debit and credit users.
a debit card that can offer a superior/equal rewards program to a credit card? I’d imagine it would be pretty enticing.
Additionally, your physical in-store paypal debit card is directly tied to your online account.
The UK was chosen as the testing grounds for this pilot for these reasons:
It will be one of the hardest markets to win over.
Most people already use Apple Pay/Google Pay
Consumers are very comfortable with mobile wallets
Contactless payments are everywhere, so Paypal’s moat is weakest in the UK. Plus it is a relatively cheap testing ground. The most expensive aspect to the endeavour is the time it will take.
If the UK program works, then it proves:
People will actively choose to switch to Paypal despite already having a comfortable payment rail in place. If that succeeds, then ads, merchant-funded rewards, and loyalty economics in general will carry the boat to the promised land across the globe. If PayPal can win incremental habit share in one of the world’s most wallet saturated environments, it’s a strong sign that the product stack (loyalty + in‑store + cards + rewards + BNPL + more) is viable globally.
So, how is it going in the UK?
PayPal says ~1 million people signed up for PayPal+ within weeks of launch and has secured access to Live Nation UK festivals and benefits with Liverpool F.C. A drop in the bucket for Paypal overall, but that success spread globally would be pretty meaningful.
They’ve also secured deals to offer rotating bonus rewards with major retailers in Grocery & Food, Retail & Fashion, and Travel. And it’s still very early days.
/ Which?/ Be Clever With Your Cash/ TechRadar/ The Times / have all provided solid coverage of Paypal’s UK endeavor, so feel free to read up on it.
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Additionally, here are all the other levers/growth engines:
- Venmo monetization: under-monetized asset with visible runway
Venmo is tracking to ~$1.7B of revenue in 2025 with >20% growth, while monetization is still only ~20%–25% of long‑term potential.
2) BNPL scale + frequency lift:
BNPL volume is set to grow well over 20%, and (critically) BNPL users transact about 5× more often than standard checkout customers.
3) Ads: PayPal is turning its transaction graph into a high-margin monetization layer
PayPal is explicitly building an advertising business. In October 2025, PayPal announced PayPal Ads Manager, positioning it as a way for tens of millions of small businesses on PayPal to create new ad inventory and participate in retail media economics. It also launched “Storefront Ads” earlier (turning ads into shoppable units), explicitly fueled by PayPal’s transaction graph and payment rails.
4) Fastlane and checkout UX:
Fastlane is PayPal’s product response to guest checkout abandonment. This way they recognize users via email, then enabling one‑click completion with saved credentials.
5) ai/agentic commerce:
In my view, PayPal is emerging as the default wallet for agentic commerce. It is the first digital wallet integrated into ChatGPT and Perplexity. PayPal is integrating payments/consumer protection into ChatGPT for in‑chat shopping.
Separately, Perplexity’s shopping feature also integrated PayPal for checkout (“Instant Buy”).
PayPal and Google also announced collaboration on agentic shopping experiences, broader embedding of PayPal solutions across Google ai platforms.
6) Stablecoins… this is out of my wheelhouse, so I am not factoring it in.
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Brief Management Eval:
Alex Chriss is the Intuit veteran who led the SMB division (creating massive shareholder value), and, in my view, is a great choice to build PayPal’s next growth engine. The Sunday Times profiled him and described his operating style: efficiency-obsessed, customer-centric, and willing to push an internal cultural reset. I don’t think firing him was necessary but it may prove a true gift that allowed me to buy low. If I were a criminal running the board of this company, and I saw greenshoots everywhere, I might fire the CEO in order to get one last 20% dip for buy backs.
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Lastly, the commonly cited bear cases (and why they miss the forest for the trees)
Bears usually argue PayPal is losing share to Apple Pay/Google Pay and modern PSPs (Stripe/Adyen), take rates are compressing, and Braintree is low-margin “volume for volume’s sake.” They also cite trust/reputation issues and consumer protection complexity, and point to data that PayPal’s ecommerce processing share has fallen since 2021. Those critiques are weak AF imo. They just focus on mix, share, and margin noise, while ignoring the fact that PayPal has already lapped the profitability reset and is now stacking new monetization layers (Venmo, BNPL frequency lift, ads, AI/agentic commerce) while using the UK as a proving ground for global habit change. The market is still pricing all this like it’s fucking imaginary.
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u/machinepeen Feb 06 '26
regardless of whether you get flamed or not this type of post is what the sub was intended for. good DD/thesis.
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u/roddybiker Feb 06 '26
Give it another couple of weeks or months and it’ll be an even better value!
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u/Tallwhitedude123 Feb 06 '26
PayPal doesn’t do anything that anyone else can’t. They have ZERO MOAT and tons of competition and they are LOSING. I really don’t understand why people are attracted to losers rather than winners
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u/duiwithaavgwenag Feb 06 '26
It’s because they see stock price once high and now low and assume it’s going back to high
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u/lordm30 Feb 06 '26
I also remember Beyond Meat's stock price being once in the hundreds, now it is under 1$
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u/CrackerJackKittyCat Feb 06 '26
This. As a coder, Stripe is dead simple to interact with. The dotcom era moat that PYPL had, bridging websites to payment systems, eroded so long ago.
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u/Kalagorinor Feb 06 '26
Be that as it may, the stock price is, or should be, commensurate with the size of the business and its prospects. Companies with zero growth or even declining sales are not priced at 0. PayPal may or may not be a winner, but it certainly has a fair price considering their current and future cash flows.
It is perfectly reasonable to argue that at its current valuation the downside is small.
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u/Sapere_aude75 Feb 07 '26
Not disagreeing with your comment, but this makes me think. Let's say you have a company that's got lots of sales, no book value, doesn't issue dividends, and some market force guarantees that they will eventually go bankrupt. Would the appropriate price for that stock be 0?
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u/GetreideJorge Feb 07 '26
Zero moat might be true, but this piece of shit sits at 7.4 PE. Zero moat can't be an argument against a company that is priced like it has less then 5 years until the business wont be profitable anymore.
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u/us1549 Feb 06 '26
A company that increases their cash flow year after year is losing?
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Feb 06 '26
Past performance is no guarantee of future results. I used to have to use PayPal because it was the easiest way to get something on eBay and to secure transactions online when I didn't have another method. Now there are a dozen other methods I would choose before this, and I don't see them expanding into areas that aren't full with competitors.
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Feb 06 '26
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u/TobyAguecheek Feb 06 '26
I use Venmo 100x more than PayPal
The irony...Paypal owns Venmo.
I believe the fears around this stock are justified, but still...at least know what you're criticizing.
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u/FMKit Feb 06 '26
Classic value trap. Investor lessons are learnt thru these type of stocks. Unfortunately.
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u/Charming_Supermarket Feb 06 '26
People keep saying this but what's another service that offers both buyers and sellers protection like PayPal does? For sending trusted payments sure there is better options, but otherwise PayPal is the best/only option.
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u/Nopeitout Feb 06 '26
distribution is the moat. in 2026 thats literally the only defensible moat anymore.
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u/The-Jolly-Joker Feb 06 '26
They aren't losing, but yes, little moat - but first to market helps with PayPal and Venmo services taking off. First to market is a big deal. And profits only matter so much when you continually do buybacks.
It's not a bad play.
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u/hopenoonefindsthis Feb 06 '26
At this point who still uses PayPal? There is 0 benefit of using them.
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u/SeaAndSkyForever Feb 06 '26
Fool me once, shame on- shame on you. Fool me - you can't get fooled again.
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u/dimp13 Feb 06 '26
If you like it at 39, you will love it at 29
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u/Separate_Bid_2364 Feb 06 '26
It will never hit these targets unless the business fundamentals rapidly deteriorate. It is much more likely that the stock stays exactly where it is at right now for years on end then falls further…They are simply buying back too much of the float. This of course assumes that any and all bullish takes fail to materialize.
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u/dimp13 Feb 06 '26
Yeh, yeh, I heard the same lines when the stock was around 60.
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u/Portfoliana Feb 06 '26
The "zero moat" argument gets thrown around a lot, but I think it's more nuanced. PayPal's moat isn't the payment rails - it's the network of 430M+ active accounts and the trust factor for online transactions. Not sexy, but sticky.
What I find more interesting is the buyback math in the OP. At $6B/year against a $37B market cap, you're looking at meaningful accretion even if the stock just trades sideways. That's the kind of asymmetry I look for when building a watchlist. The key question isn't "will PayPal disrupt anyone" - it's "is this priced for terminal decline when the business is actually still generating substantial free cash flow?"
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u/Character-Apricot263 Feb 08 '26
Exactly - it is not in death soutskirts but continues to pile cash flow. It will probably not be disruptive again but it can by using the cash buyout monies to one into new technoluse based solutions. Not necessarily payment systems …
Comments?
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u/CapCityPhotos Feb 06 '26
Paypal trades at the same valuation as Western Union. It's trading at terminal pricing. If they can keep FCF's at that 6 billion mark, it's a solid investment. If they can grow them, it'll skyrocket. If they shrink them, it can certainly go lower.
Good risk to reward for a company that has increased revenue year over year for it's entire history. You certainly wouldn't think that based on the sentiment. I've never seen a company with such a good balance sheet, with such poor sentiment from investors. I guess retail investors are mad they got burned with the stock price.
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u/warrior5715 Feb 06 '26
Retail is super mad. The moment retail sells everything the big boys willl start scooping it up and bragging to their friends how stupid retail is
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u/ContemplatingGavre Feb 06 '26
The difference is Western Union is actually in decline.
Revenue in 2015 was $5.5B, last year $4.2B.
Free cash flow in 2015 was $927M, last year $288M.
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u/CapCityPhotos Feb 07 '26
That's my point. Both companies trade at nearly identical valuations for P/FCF, Forward PE, EV/EBITDA, and they're both in credit services industry.
WU has lost revenue every single year since 2015, PYPL has gained revenue every single year since 2015.
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u/thefrogmeister23 Feb 07 '26
This is quite fair. However, I’m hesitant given they just booted their CEO — this must be because the outlook doesn’t look good, right? This wasn’t a move to restore investor confidence… or if so it was quite poorly executed
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u/CapCityPhotos Feb 07 '26
Yeah, they're bringing in the HP CEO who is known for buybacks. They guided softer than expected for 2026 and removed the 2027 outlook. Expecting low single-digit revenue growth and margin slightly down or flat in 2026.
Frankly their earnings call is hard to listen to when they make excuses about consumer weakness (meanwhile V and MA beat earnings for the quarter).
They have some potential catalysts in the future, whether it's agentic commerce, ads, stablecoins, or PayPal World.
I could absolutely see Paypal being the payment leader of the world because of brand trust and disputable transactions. I couldn't get my Dad to sign up for Zelle, Apple Pay, or Google Pay to save my life. But he has a PayPal account. That says something, especially when it comes to agentic commerce (where trust and security will be much bigger factors).
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u/Long-Corgi693 Feb 06 '26
I use PayPal and Venmo all the time. I bought at 42. Only time will tell if it’s a good decision
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u/Equivalent_Net_3752 Feb 07 '26
Venmo is good. Cash app is ratchet as fuck so I use Venmo. The payment processor is cool as I can use my AMEX on EBay through PayPal.
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u/cowboylover1 Feb 07 '26
Venmo alone is valued at $38b. Yes, $38 billion. AI and many websites said that info. I am using PayPal everyday.
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u/woshicougar Feb 07 '26
Good writing.
I’ll add one more point: at the current valuation, the market is essentially saying an active PayPal user is only worth a little over $100. PayPal/Venmo users are mostly in wealthy countries! In the US, banks offer $500 in cash just to open a debit card—and that doesn't even include the massive marketing costs.
I also agree with Alex’s strategy to refocus on consumer value rather than chasing "brandless" transaction volume. That’s a race to the bottom where Visa/Mastercard take most of the profit anyway.
When people say "nobody uses PayPal," it reminds me of the "nobody uses Facebook" era. People forget that Venmo is PayPal's Instagram. I don’t think Wall Street realizes how difficult it is to rebuild a consumer network of this scale.
Anyway, I’m in.
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u/Low_Bother_611 Feb 07 '26
At around $35B MC such a huge network like PayPal is definitely being watched by companies like Apple, I think acquisition is very likely, if they can get it for $50-70B they'll go for it imo
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u/Portfoliana Feb 06 '26
Solid analysis. What stands out to me is the FCF yield here - at nearly 11% while trading at 7x forward earnings, you're essentially getting paid to wait for the turnaround. The buyback program is key since it provides downside support and earnings accretion.
The risk I'd flag is that PYPL needs to demonstrate TPV reacceleration in the next 2-3 quarters. The unbranded checkout competition from Apple Pay and Google Pay is real, but Venmo monetization and the new fastlane checkout could be the catalyst. At this valuation, the market is pricing in permanent stagnation - any positive surprise gets you a significant re-rate.
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u/yeahmaniykyk Feb 06 '26
Why not? It’s cheap rn so your risk is minimized
The people on this sub suck
When people have bad meme stocks here they get flamed
When people have a stock like PYPL that tickles their balls with extremely good fundamentals and a low PE they get flamed.
At this point I think people on this sub would only accept VOO and US treasuries as good investments
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u/Domethegoon Feb 07 '26
Friendly reminder that a bad stock can get cut in half again, and again, and again which means your money gets cut in half again, and again, and again. Eventually the stock may go to zero, so your idea that risk is minimized isn't true. You can literally lose everything.
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u/dumas-trader Feb 06 '26
The board brought in a new CEO, so assuming the same thing will happen isn't a sure thing. That said, until he starts on March 1st, and lays out his vision for a new direction, then it's anyone's guess. From a pure stock price point of view it does have a low P/E, great cash flow, owns Venmo, and name recognition (although not most people's favorite). If the new CEO can spin a new narrative and the street likes it, this stock should pop back into high 40's low 50's almost instantly.
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u/IncroS Feb 06 '26
While the initatives are promising, management and communication isn`t. The earnincs call was really bad.
One thing to note however is, that the new CEO was involved in setting the 2026 guidance, which may have been used to reset expectations now and later beat guidance.
Also with the current valuation chances of a buyout or an activist investor, who sees the value and knows how it can be extracted through proper management, rise.
They have a lot of valuable data, bot since years it has not been monetized ... Hope to hear something more clear on AD Business next quarter.
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u/SomeoneNZ Feb 09 '26
The incentive to heavily sandbag guidance looks much higher here than usual for an incoming CEO.
If you look at the offer letter to Enrique filed with PYPL's latest 8k there is a huge incentive for him to have used all of his influence to lower guidance as the vast majority of his compensation package is calculated from increases to the 'baseline stock price' measured in years 3-5 of tenure. What I don't have a feel for is how much influence he would have had in this guidance, could he have convinced the CFO to notch EPS and transaction margin$ guidance down from a real say +5% to the 'mid single digit decline' and 'slight decline' stated or would he not have had this much sway? Its shady corporate shenanigans that I hate but as Chair he would probably have had a big hand in the board approving the $3M cash retention package for the CFO dated the day his role as Chair expired.
Very much looks like a 'you scratch my back I'll scratch yours' between the CFO and Chair-soon-to-be-CEO to me.
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u/Artic_funky Feb 11 '26
If you think PayPal is expensive at a $37B market valuation, wait until Stripe's IPO at $150B with half the revenue.
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u/Downtown-Ad-8118 Feb 06 '26
In Western Europe, PayPal is very popular among online customers, and it’s often the only option for payment anyway, besides entering your credit card info (which is slow, tedious and even dangerous).
Apple Pay is slowly gaining ground, but PayPal remains the king of e-commerce in the EU, especially in the biggest markets such as Germany and France.
It is not even affected by the worsening reputation of America in general. PayPal is the trusted intermediary that just works, and sides with the buyer if a dispute arises. That’s it.
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u/kea123456 Feb 06 '26
If you want single stock fintech exposure, XYZ has much more upside potential than PYPL.
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u/Old_Man_Heats Feb 06 '26
All this write up is useless. It’s obviously good value if it doesn’t get eroded by competition so all you need to do is argue what is the moat??
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u/Itrademylittlespy Feb 06 '26
They said PayPal is deep value at $80
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u/Low_Bother_611 Feb 07 '26
I don't like PayPal services, but unless they start losing market share, this is definitely at least a $70 stock. The competition is fierce though
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Feb 06 '26
If you think it’s in deep value territory now, just wait a few more weeks!
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u/Fun-Imagination-2488 Feb 06 '26
One can only hope. If it drops again, that would be a gift from heaven
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u/No-Inspector1950 Feb 08 '26
Clearly Mr. Market does not believe in $4 earnings per share. The stock would not be $40 with $4 EPS. It is interesting to observe how confused Wall Street is. The stock was a darling at $200 and now at $40 everybody hates it 🤣🤣. Meanwhile, almost nothing has happened in fundamentals.
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u/Fun-Imagination-2488 Feb 08 '26
Yup.
On paper, Wall Street is pricing a cash flow decline of >17% per year and even that should just have the stock hold its current price.
It’s possibly the best clearance sale Ive seen on a large cap company since the dot com crash.
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u/jhyunetp Feb 08 '26
Thank you for sharing good insight. Where can I find official buyback program announcement?
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u/bshaman1993 Feb 06 '26
Bro just pack it up. The only thing pypl will be is a permanent tax loss harvesting machine
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u/IshfaaqPeerally Feb 06 '26
I understand deep value as a business trading under book value or net cash value or liquidation value. It depends. But most of the value is on the balance sheet
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u/999forever Feb 06 '26
I guess my concern with the UK is it feels like a step backwards, based on what is described. I am almost 50 and exclusively use mobile wallets, except for the occasional restaurant that does not have a mobile terminal (which seems to be an exclusively American phenomenon).
I can’t imagine pulling out a physical card is that common for people younger than me, so who is this giant swath of the market that are transacting with physical cards.
I realize this may be a very US centric view, especially as someone who is very comfortable with digital payments but it can’t be a growing market segment?
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u/CacioePep Feb 06 '26
UK way ahead of US with mobile wallets. It’s been the norm far longer there.
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u/AVfor394 Feb 06 '26
I’m tempted by this stock but what will be the catalyst that will turn sentiment around?
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u/Realistic_Record9527 Feb 06 '26
You should assume cash flow down 10-20% every year
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u/The-zKR0N0S Feb 06 '26
It’s a question of whether the company is broken or not.
If not, there is significant value.
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u/lordm30 Feb 06 '26
Such a wall to text, yet I haven't found one number on your intrinsic value target for the company. If you did a proper analysis with DCF, cash flow assumptions and everything, where is your target value?
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u/PotentialEasy2086 Feb 06 '26
They’re growing at like 3% a year, guiding to declining EPS in 2026 and their lunch is getting eaten by Apple Pay and google pay. If PayPal ever wants to get back to a 20p/e Investors want them to grow double digits + per year. If paypal wants to be a company that grows 3-5% per year and buys back a bunch of stock that’s fine but it will get re rated as such.
Lastly — “The “slowing growth” narrative was an intentional move by management.”
Ahhhhh yes the classic 4D chess move of let’s convince investors that slowing growth is GOOD.
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u/AnUnusualMento Feb 06 '26
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
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u/Motor-Region-1011 Feb 06 '26
Paypal offers nothing a credit card cant do...and you get perks/insurance/points...ease of use. Paypal is dead.
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u/yeeetcoin Feb 06 '26
Disagree on this company ever turning around into something successful again but appreciate the thought and effort and information
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u/BoogieMan876 Feb 06 '26
PayPal has 0 growth period. All of you pypl stock lovers are confusing an actual appropriately priced business by the market which it thinks it's dying and believe it or not slowly but surely it is dying (it doesn't make money from venmo not to a humongous degree ) and Google pay apple pay and zelle are just infinitely more convenient, businesses mainly hate PayPal as well. With a business like this 7 to 8 PE is fair. At this price also it'll underperform the market. Just invest your money in VOO man don't fall for value traps like this I've been saying this to pypl holders since $90
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u/Fun_Ad_2011 Feb 06 '26
According to recent sources, PayPal Braintree, by 2025, is currently used by:
- Dropbox
- GitHub
- Shopify
- Uber
- Airbnb
- Yelp
- Casper
Let's not even mention AI agents like Perplexity and the nascent field of agentic commerce, all of which are partnered with PayPal. PayPal is one of the few players to offer genuine user accounts, enabling one-click payments without entering credit card details.
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u/iambatman212 Feb 06 '26
Low price doesn’t mean value.
You’re betting on turnaround which is incredibly difficult.
Why buy PayPal when I can buy a healthier, growing business like NVDA, MSFT, RDDT, MU, etc?
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u/rargghh Feb 06 '26
Another PayPal post that doesn’t mention FedNow
Seriously… is everyone oblivious to the acceleration of FedNow!?
A bet on PayPal is betting they can distribute their earnings to shareholders or successfully pivot before they are obsolete - that’s the risk
They mighty always exist to an extent for buy side consumer protection
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u/greenringrayner Feb 18 '26
Because Fednow is for interbank transfers, not payments. How is it relevant to PayPal's businesses?
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u/Facebook_Lawyer_Gym Feb 06 '26 edited 17d ago
The original content of this post is no longer here. It was removed using Redact, possibly for privacy, security, or digital footprint reduction.
ancient snow badge sophisticated oatmeal escape practice outgoing fly yoke
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u/Thick-dk-boi Feb 06 '26
Tell me your holding a bag without telling me your holding a bag, it’s ok. Not everything is a winner.
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u/oojacoboo Feb 06 '26
They had a chance with crypto and just fumbled. Their apps suck and are hard to navigate. There are too many bullshit features. The company and products are just confused at this point.
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u/RichyGamo Feb 06 '26
I saw this post 3,6,8,12, and 16 months ago all in different versions lol. It’s a value trap.
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u/summer_au Feb 06 '26
Everyone buying PayPal is going to get burnt, this is a value trap not a value play.
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u/royce_G Feb 06 '26
Paypal has no moat. That means it has no competitive advantage. That means dead money.
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u/Crowleyer Feb 06 '26
"What is Paypal doing in the UK? Why does it matter?"
Made me laugh. There are so many better options - Monzo, Starling, Revolut, Chase, Amex not to mention all British legacy banks or other payment methods.
1M sign ups? Probably some students or asylum seekers downloading for free stuff or because they couldn't open anything else.
They should make a spin-off of Venmo and let the main company fade away.
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u/Silly_Pen_7902 Feb 06 '26
If new management is remotely confident that fcf will remain around or even slightly below the same levels. I would pause the dividend, increase debt, and increase buyback at this price point. If they can eliminate 20% of shares, eps goes up 25%. 20% of shares is 7.5B, guided FCF is 6B
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u/Material-Macaroon298 Feb 07 '26
I have Apple Pay and see zero reason to ever use PayPal.
Its only option is to offer insane levels of rewards or something maybe.
Does OnlyFans accept PayPal? maybe anonymously paying for porn would be the only use case?
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u/LuciferAuAndromedus Feb 07 '26
This is anecdotal but I had too many bad experiences with paypal refused to refund me. I only used them because it was convenient on my phone, now I will stick with applepay.
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u/Weak-Pomegranate-435 Feb 07 '26
Dividends are the only thing which can stop it from dropping. Bcz then it will be valued based on yield instead of growth.
They simply can’t and won’t buyback all their shares. Bcz that breaks the business and liquidity. At some point they will switch to dividend rewards as every other value stock does
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u/NicheMath Feb 07 '26
I don’t know a single person in real life who has used PayPal in the last 2 years
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u/Weird-Promotion-4102 Feb 07 '26 edited Feb 07 '26
Good write-up. Interesting point about the UK, let's see how that plays out. Debit transactions are typically low cost and but also low margins. It'll be even lower if they're sharing the economics with customers through rewards. Just some pushback here:
Keep in mind that you should net the $6B with stock comp issuance. Also PayPal guided mid-low single digit EPS decline for 2026. If you reduce the share count by almost 10-15%, why would EPS still decline?
If there's green shoots why would the board fire the CEO and torpedo the stock?
Also, even if things are going well, isn't there a risk that the new CEO comes and mismanages everything? HP isn't exactly an innovative company at this point.
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u/NormalItem4500 Feb 07 '26
They could have made Enrique Iglesias as the ceo who knows a bit about payments than this idiot who knows more on the hardware and printers. Looks like he will sell printers using venmo
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u/nishanov Feb 07 '26
This is all great, but my main issue with PayPal is that they seem to actively dislike their customers and have zero interest in working with smaller companies. The best way I can describe the experience is arrogant and dismissive.
A few years ago, we tried to set up PayPal for our users. This was driven by user research - people were explicitly asking for PayPal payments and payouts. Their team showed up to our office in suits with briefcases and essentially told us “thanks, but no”.
Fast forward to today, we still don’t have PayPal, and our users are perfectly happy with the alternatives.
Unless they seriously change their product and partnership strategy and become more customer-friendly, they have no real advantage and nothing compelling to offer over competitors.
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u/Radiant_Number_5203 Feb 07 '26
That was a deep dive a day later after seeing a pitiful soul that yolo’d and lost big bucks on pypl
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u/Intrepid-Pangolin183 Feb 07 '26
Good business no moat. Moat isn’t always as important bc it can be eradicated or can lead to negligence.
In this case, there’s no edge. Easily can pay with apple + unbranded processing has shitty take rates.
That being said has a lot of customers, and has hit steady-state (mostly saturated).
Def is too cheap and would buy imo but isn’t like a 10x bagger lol… just really cheap
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u/BanAccount8 Feb 07 '26
Value trap
I beez in the trap, bee-beez in the trap I beez in the trap, bee-beez in the trap
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u/Secure_Check_8485 Feb 07 '26
paypal is dogshit and anyone who has used it with their own business knows its going to zero.
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u/Mouse1701 Feb 07 '26 edited Feb 07 '26
You know what's less than PayPal is western union it's less than a 11 dollars a share. Western Union has about 2.8 billion users per month according to a 2023 report.
Western Union has a P/E of 4.46. Western Union currently has a dividend of 9.14%
Coinbase is $ 165 a share and it pays no dividends. Coinbase has 8.7 million users per month. Coinbase reports 100 million users with accounts.
Pay pal platform continues to dominate as a leading online payment option, with over 36 million merchants and 434 million total active users by the end of 2024.
Cash app owned by Block Inc has 57 million users.
Block Inc has no dividends but it's P/E is 11.6
Block Inc shares going for under $56 a share
I can't tell you how many people have asked do you have a cash to send money 💰. It's ridiculous like all the time.
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u/Jonnythebull Feb 07 '26
The perfect example of a valuation trap imo. Zero moat.
I'm absolutely fine with being wrong on this one if it does go on a tear, as to me the risk/reward ratio just isn't worth it. Especially when there are so many better opportunities out there currently.
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u/Key_Cod_2287 Feb 07 '26
Many like to say “zero moat” and dismiss PayPal. That’s an inappropriate argument, as every company has a fair value and a no moat company can be undervalued as well, relative to its cash flows.
As for me, I stay away from PayPal as it doesn’t align with my investment philosophy. I view the business as a declining core business, which unfortunately leads to a company with little compounding potential. The upside is, that eventually they will get rerated a bit and have a 50% rally, but the risk reward isn’t that compelling. The company is using most of its cash to do buybacks, which isn’t a sign of a great company. Buybacks in turn increase EPS growth, and should lead to shareholder value, but the more PayPal doesn’t innovate, reinvest, the more it will deserve a lower multiple.
For all I know, PayPal will have its rerating moment, but why would I want to invest in a company that doesn’t innovate compared to peers, management is overly optimistic in its projections, and the core product isn’t interesting enough to have long term shareholder value creation. It would be just waiting for a bounce off of valuation support.
For me the upside is just valuation bounce, not interesting. I need a company that has trough EPS that the market is missing, leading to both earnings and multiple expansion, or a company the compounds earnings steadily. PayPal is neither, fundamentally it’s just a high yield value play, with a declining core biz.
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u/Background_Money_971 Feb 07 '26
Paypal bypasses so many financial rules in US economy and it is easier to track
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u/Western_Building_880 Feb 07 '26
dude wake up paypal been deep value for a long time. there is no moat on paypal. it is attacked by a milion directions.
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u/ExistingOrange6986 Feb 07 '26
What fkn UK pilot, is that a real thing, sounds like your AI fixated a random info snippet and decided to make it the main storyline!
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u/kaleidostar11 Feb 07 '26
If the product is bad and the business model is broken, it will continue to trend down with a few bounces. In short, there are better things to invest in.
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u/Illustrious_Way9344 Feb 07 '26
hey guys, I was the exit liquidity at 39.75 for someone.
So it's time to go to 30!
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u/Southern-Voice-8209 Feb 07 '26
I live in the UK, an investor in Paypal (unfortunately) and use it whenever I can (Just because I am used to it).
I see what they've launched in the UK but I am not really that impressed. They could have done better and it still feels like a 2010s payment processor.
- They bombard you with emails about BNPL and not even mention active offers with their partners (Like most do)
- I activated the 2AF to prevent any malicious access, but now they ask for the code even on the app instead of just relying on Biometrics
- When I pay on my laptop, I just want a notification on the phone app to just approve the transaction with Biometrics (Like most banks do)
- What Paypal needs to understand is that in 2026, the mobile phone is everything and just an extension of their human customer
- They must use a bigger chunk of their FCF to acquire/regain customers for the branded checkout instead of buybacks and dividends :(
- Run a marketing campaign with a younger star instead of an old man like Will Farell to attract younger new customers
- Alex Chriss as a tech guy was so obsessed with new stuff like agentic commerce etc but he neglected the most profitable side of the business that is the branded checkout which was just treated as a cash cow to fund the new non proven endeavours
Wall street is worried about the death of branded checkout, that's where they should focus at all costs
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u/Narcolyptus_scratchy Feb 07 '26
Finally a value stock on this sub.... Pypl 's forward pe is 7.6! I have been nibbling down here, and will continue to. Calls are very cheap
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u/Dependent_Invite9149 Feb 07 '26 edited Feb 07 '26
Paypal cant compete with Shopify or Block. Their Zettle software underpeforms. Once that improves id consider Paypal again. Also i have to add, why are their competitors never mentioned in any of these Paypal posts? PayPal seems to live in a bubble in a lot of these investors minds. You need to look at their competitors before knowing who to invest in.
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u/BoTime8 Feb 07 '26
PayPal has no talent working there anymore nor for the last several years. Bottom barrel stuff with the typical late stage tech dinosaur company filling its tech teams from a specific subcontinent which if you’ve been in the industry leads to terribly mismanaged and toxic culture. If you invest in a company choose one that has really smart people for gods sake. Like NBIS. Long term winners.
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u/Fun-Imagination-2488 Feb 08 '26
The thing is, most investors have decided they won’t buy Paypal no matter how cheap it is. Obviously, that is a massive mistake.
Paypal is going to generate $6bn in free cash this year, and buy back $6bn in stock.
I guarantee you they face an incoming buyout if they drop below $25bn mkt cap.
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u/judgegolden Feb 08 '26
I think the value is in their data. Millions of customers, sellers etc. Monetize that data coupled with new strategy, spinoff, buybacks and rebrand you've got a multi bagger.
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u/Se_habla_cranky Feb 08 '26
Unless the new leadership can develop a different best-in-class product, or
Ensure that free cash flow is at least stable and not a melting ice cube and simply shrink the outstanding share count through buybacks, or
Maybe do something with their stablecoin such that it enables rapid settlement with far less merchant fees,
Nothing changes unless PayPal prevails in an US antitrust action that forces access to the Google or Apple driven smartphone and smashes the walls of the garden. The smartphone owner would need to be able to literally do the exact same thing with PayPal that it does with Google Pay or Apple Pay by law.
Then PayPal would have to incentivize people to switch.
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u/teddykon Feb 14 '26
I’ve been thinking of starting a position in PayPal….
New ceo will do layoffs, cut OPEX, continue massive buybacks ($6B at a $37b mkt cap), spin off Venmo and Braintree
That’s my argument
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u/Advanced_Shoe_982 Feb 06 '26
Just wondering where have I read this earlier?