PayPal's (PYPL 1.91%) stock has declined more than 40% over the past 12 months. Its cooling sales growth, macro and competitive headwinds, and murky plans all dragged down its stock and caused it to underperform many of its fintech peers. Should investors buy PayPal's beaten-down stock before it posts its next earnings report on May 5?
Image source: PayPal.
What happened to PayPal?
Back in 2021, PayPal declared it would reach 750 million active accounts by the end of 2025. It eventually abandoned that ambitious target, and its total number of year-end active accounts only increased from 426 million in 2021 to 439 million in 2025.
PayPal attributed much of the slowdown to inflationary headwinds on consumer spending, but it also faced stiff competition from other digital payment and fintech platforms. Its involuntary decoupling from eBay (EBAY 1.06%), which lasted from 2018 to 2023, exacerbated that pressure.
NASDAQ: PYPL
Key Data Points
Over the past year, PayPal's revenue grew by low-to-mid single digits as it struggled to gain new customers, meaningfully increase its transaction volume, and improve its transaction take rate (the percentage of each transaction it retains as revenue).
|
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.
PayPal's transaction volumes declined as it relied more heavily on its branded checkout platform, Venmo peer-to-peer payments app, debit cards, and buy now, pay later (BNPL) services to drive its top-line growth. Those core platforms all net higher average payments on fewer total transactions than PayPal's other, higher-volume services.
PayPal has been downsizing one of those higher-volume, lower-value platforms -- its backend payments platform, Braintree -- to stabilize margins and take rates. At the same time, it's been cutting costs and buying back more shares to grow EPS as its sales growth cools.
Should you buy PayPal's stock before May?
For 2026, PayPal expects EPS to decline by the mid-single digits as its branded checkout platform struggles to grow in a market filled with similar payment services. It's trying to offset that pressure by rolling out more offline and online checkout features, but those strategies will drive up its expenses -- and it's unclear if they'll meaningfully widen its moat.
PayPal's stock looks dirt cheap at 8 times this year's earnings, and it might attract some takeover interest from a bigger bank or tech company. However, I wouldn't rush to buy it as a contrarian play before its next earnings report unless a few more green shoots appear.
