PayPal (PYPL 1.13%) is one of the world's largest digital payment platforms. It initially went public in 2002, was acquired that same year by eBay (EBAY 0.72%), then spun off again as an independent company in 2015.

PayPal's stock has risen 65% since that spin-off as eBay's stock advanced 58%. However, PayPal's stock has also plunged a whopping 80% after closing at its all-time high of $308.53 on July 23, 2021. The fintech giant lost its luster as its growth cooled off in a post-pandemic market, it abandoned its ambitious long-term expansion plans, and rising interest rates popped its bubbly valuations. Inflationary headwinds and its decoupling from eBay -- which replaced PayPal with Adyen (ADYE.Y -0.61%) as its main payment processor over the past five years -- exacerbated that painful slowdown.

PayPal's offices in Dublin, Ireland.

Image source: PayPal.

I recently discussed PayPal's problems and said it would stay in the penalty box until its revenue growth stabilizes. It also needs to grow its earnings per share consistently without relying too heavily on aggressive cost-cutting measures and big buybacks. But here, I'll focus on three other aspects of PayPal's business and how they might affect its long-term plans.

1. PayPal's CEO will step down at the end of 2023

In February, PayPal CEO Dan Schulman -- who had led the company ever since its spin-off from eBay -- said he would step down by the end of the year. That announcement came only a year after he set some ambitious growth targets for 2025.

During PayPal's investor day presentation in early 2021, Schulman claimed the company could nearly double its number of active accounts from 377 million in 2020 to 750 million, more than double its annual revenues to over $50 billion, and more than double its annual free cash flow (FCF) from $5 billion to over $10 billion. That bold forecast initially allayed the bearish concerns about PayPal's post-pandemic slowdown, competitive headwinds, and its loss of eBay's revenues to Adyen.

But Schulman abruptly walked back his lofty goal of reaching 750 million active accounts in early 2022, and PayPal ended the year with just 435 million active accounts. That figure shrank sequentially to 433 million in the first quarter of 2023. In 2022, PayPal's annual revenue only reached $27.5 billion as it generated $5.1 billion in FCF -- so it would take a miracle for its annual revenue and FCF to surpass $50 billion and $10 billion, respectively, in 2025.

Schulman hasn't officially abandoned those goals yet, but his upcoming departure suggests those targets should be scrapped. PayPal's board also hasn't found a successor for Schulman yet, and it's unclear if its next CEO will continue to cut costs or sacrifice its near-term margins to expand its ecosystem aggressively.

2. A takeover of Pinterest wouldn't be surprising

Schulman likely believed PayPal could quickly reach 750 million active accounts by buying another platform with hundreds of millions of active users. That's probably why it reportedly held talks to acquire Pinterest (PINS -2.02%) in October 2021.

Those talks eventually fizzled out, but they indicated that PayPal was mulling an expansion of its ecosystem into the "social shopping" space. Pinterest's virtual pinboards -- which allow its users to share ideas for shopping, fashion, DIY projects, recipes, travel, and more -- can also help companies promote their products and services. PayPal could also join (or replace) Shopify's Shop Pay payments, which have already been deeply integrated into Pinterest's "shoppable pins."

Pinterest's enterprise value has declined 57% since October 2021, to $13.8 billion. It still isn't a screaming bargain at five times this year's sales, but it's a lot cheaper than it was during the peak of the buying frenzy in meme and growth stocks in late 2021. Pinterest's growth has decelerated in a post-pandemic market, but it ended its latest quarter with 463 million monthly active users, and its revenues are still rising. Therefore, I wouldn't be too surprised if Schulman's successor approaches Pinterest again, to broaden PayPal's moat against Shopify while gaining a firm foothold in the social shopping market.

3. PayPal's still expanding into other high-growth fintech markets

Investors might think of PayPal as a platform which only processes peer-to-peer and consumer-to-business transactions. Those transaction fees certainly account for the lion's share of its revenues, but it's also expanded into higher-growth fintech niches like buy now, pay later (BNPL) services and cryptocurrency trading over the past three years. 

PayPal launched its "Pay in 4" BNPL service in 2020, and expanded that feature in 2021 by acquiring the Japanese BNPL start-up Paidy in 2021. Both moves could help it profit from the long-term growth of the global BNPL market -- which Grand View Research believes could expand at a compound annual growth rate (CAGR) of 26.1% from 2023 to 2030. It also launched its own cryptocurrency trading tools in late 2020.

Will these factors affect PayPal's future?

I'm not a big fan of PayPal right now, but all three of these factors could change the company's future. A new CEO could breathe fresh life into its aging business. A takeover of Pinterest could completely transform its business model, while a daring expansion into higher-growth fintech markets might lock more users into its ecosystem.