PayPal (PYPL +0.20%) continues to find ways to lose money for its investors. In the past 12 months, the share price of this digital payments giant is down 23% (as of April 14). For what was considered such an innovative business in its earlier days, this is a disappointing trend.
Where will this fintech stock be in one year?
Image source: PayPal.
Earnings pressure will continue
The company wasn't performing well enough in recent years under Alex Chriss to avoid a leadership change. PayPal's new CEO, Enrique Lores, has a lot of work to do to get the business back on track. The market, however, believes there will be near-term pressure.
According to sell-side consensus analyst estimates, PayPal's revenue is projected to rise only 2.9% in 2026 compared to the year before. And based on internal guidance, earnings per share (EPS) are expected to decline by a mid-single-digit figure. These aren't encouraging forecasts.
On the top line, PayPal's growth has been discouraging for years now. The company's exclusive partnership with eBay was phased out earlier this decade, after which point sales gains started to decelerate drastically. Inflationary forces, intense competition, and weaker consumer spending are other factors that might be taking a toll on the business.
The business is investing in growth areas. These are geared toward "scaling new experiences, improving presentments, increasing consumer selection, as well as driving adoption of new channels," said Steven Winoker, Chief Investor Relations Officer, on the Q4 2025 earnings call. So, investors should temper expectations around profitability improvements.
A cheap valuation could protect the downside
It's almost impossible to be optimistic about a company whose profit is expected to fall this year. However, PayPal can present an attractive opportunity for value investors looking to scoop up the stock at an extremely cheap valuation.
The stock currently trades at a price-to-earnings ratio of 8.9. Besides earlier in 2026, shares have not been at this low of a multiple since its 2015 spin-off from eBay. This valuation gives investors a sizable margin of safety, as it seems investors have given up on the company.
The downside is somewhat protected by the management team's capital allocation. PayPal plans to spend $6 billion on share buybacks in 2026, equal to 14% of the current market cap. This will provide support to EPS.
NASDAQ: PYPL
Key Data Points
Avoid PayPal stock
Exactly one year ago, PayPal traded at a P/E ratio of 14. At the time, this was still considered a bargain valuation. But investors who bought shares back then would've lost 23% of their starting capital.
This history lesson should inform investors' decisions today. Just because the stock is even cheaper doesn't automatically mean that the market will reward you over the next 12 months. It's hard to predict how market sentiment will change. And because PayPal's business is struggling, that sentiment could remain pessimistic.
Between now and mid-April 2027, this fintech stock could continue to disappoint. It's a good idea to avoid PayPal until the fundamentals improve.
