What happened

Shares of PayPal (PYPL 0.34%) stock fell 18% in May, according to data from S&P Global Market Intelligence. The company released a first-quarter earnings report that worried investors.

So what

PayPal is still the industry leader in digital and peer-to-peer payments, with first-quarter total payment volume (TPV) of $355 million, a 10% year-over-year increase. Revenue was up 9% to $7 billion, and adjusted earnings per share (EPS) increased 33% to $1.17.

Revenue growth has decelerated into single digits, and it's expected to further contract to 6.5% to 7% in the second quarter. Management raised full-year EPS guidance to $4.95, or a 20% increase over last year.

That doesn't sound bad at all, and even more so when you factor in the difficult operating environment that includes slowdowns in spending and a high-interest-rate environment. 

Investors seem to be more focused on PayPal's long-term prospects, which is the right lens in which to view the stock's value. 

With its lead in its business, PayPal is the company to beat in this game. The thing is, many companies are doing just that, getting into digital payments and financial technology, and bringing a fresh face to the table. It's ironic to think of PayPal as the older, established company in an industry that itself is so young and technology-oriented, but it's been around long enough for PayPal to be huge and relevant. A company as big and dominant as PayPal can sometimes be hampered with agility and innovation by its size and focus. 

Fintech is wide open with tons of opportunity, and other companies are working, often in niche segments, on developing new technology in digital financial services. 

Furthering sour investor sentiment, PayPal CEO Dan Shulman is leaving the company at the end of the year. A fresh CEO might be just the thing PayPal needs to generate investor enthusiasm, but until one is announced, the market may not take a liking to PayPal stock.

Now what

PayPal is still posting admirable performance in a hostile environment, and it's still releasing new features and services to protect its moat as the dominant player in its business. It's long-term potential looks solid.

PayPal stock is down 10% this year, and shares trade at just 27 times trailing-12-month earnings. That's about half of its five-year average. 

Is it cheap? With its slowing growth rates, it's probably priced about right, and forward-thinking investors can feel comfortable buying PayPal stock as a long-term addition to a portfolio.