Ever since its founding more than two decades ago, PayPal (PYPL 2.90%) has been a true trailblazer in the world of electronic payments. However, the stock has largely been a disappointment for shareholders. As of this writing, shares are 76% below their all-time high, and they are down 2% in 2023, missing the broader market's rally.

Before deciding to add this popular fintech stock to your portfolio, it's best to gain a better understanding about the business. Here are three things the smartest investors know about PayPal. 

1. PayPal's different services

Shareholders might know that PayPal has 433 million active accounts and processed $1.36 trillion of total payment volume (TPV) in 2022. But investors may not know the PayPal network is made up of some major pieces.

For starters, PayPal operates its own branded-checkout service, which is what many consumers see when they find themselves trying to buy something online and want to finish the transaction safely and seamlessly. PayPal is the most widely accepted digital wallet in North America and Europe, and its competition isn't even close to the same level of ubiquity there. 

Then there's Braintree, the company's unbranded-processing solution for merchants to accept digital payments. In 2022, Braintree's TPV jumped 40% year over year to total $408 billion, so it's a significant part of the business. This growth was much faster than any other segment.

PayPal also owns Venmo, the popular peer-to-peer payments network. Venmo's TPV increased 9% in Q1 2023 to $63 billion, so it's a smaller division. Venmo recently announced an enhanced partnership with Microsoft that lets customers pay in multiple ways. And Amazon customers can pay with their Venmo balances.

2. Macrosensitivity 

Part of the reason that PayPal's stock has been crushed is the difficult macroeconomic environment that took hold in 2022. The business reported slower revenue growth throughout last year. And in the first three months of 2023, revenue was up just 9%. Investors haven't been accustomed to seeing single-digit gains from PayPal. 

PayPal's business was firing on all cylinders during the depths of the pandemic when consumers, who were flush with cash, turned their spending to online shopping. However, spending behavior normalized as the pandemic economy changed alongside easing concerns about COVID-19, which explains PayPal's difficult year-over-year financial comparisons.

Moreover, because PayPal's network leans more toward discretionary purchase items, it will face headwinds in recessionary periods. That's something investors should keep in mind right now.

The flipside is that in inflationary scenarios, PayPal can be a natural hedge. If people are forced to pay more for things, the fees that the company earns can go up as well.

3. New leadership 

Dan Schulman has been the CEO of PayPal even before it spun off from eBay in 2015. He has spearheaded the organization, driving impressive TPV, revenue, and user growth. And at one point in July 2021, the stock was up 740% in just six years' time.

But there are easy arguments to make about Schulman's blunders, most notably poor capital-allocation decisions. Since he became CEO, PayPal has made sizable acquisitions, like the $4 billion purchase of Honey and the $2.7 billion purchase of Paidy. It's hard to gauge how much value, if any, these deals have brought to PayPal.

The business also still holds equity interests in Uber and Mercado Libre that were made in 2019. Are these really core to the company's operations? Maybe PayPal would be better off selling these positions and redirecting the capital toward greater share repurchases.

It's anyone's guess who the new CEO, scheduled to take over at the start of 2024, will be. But I'm sure shareholders are hoping that person can breathe signs of life into PayPal.