If you've been short PayPal Holdings (PYPL +0.28%) shares, then congratulations are in order. The fintech stock is trading down 27% in 2026 (as of June 24). And it trades at a troubling 86% below its record high in July 2021.
This is a sound business from a financial perspective. But the market clearly isn't adopting an upbeat tone. Shares can be bought right now at a price-to-earnings ratio of 7.8. At the same time, the S&P 500 index trades at a multiple of 25.2.
Do PayPal shares present a cheap opportunity that investors should take advantage of? Or is this stock a value trap?
Image source: PayPal.
PayPal has some compelling traits
The stock's performance can support bearish sentiment. However, PayPal isn't a business that's on the brink of collapse. In fact, it possesses attractive qualities. The company benefits from a network effect, as it operates a two-sided ecosystem of 225 million monthly active users, comprising merchants and individuals. This gives it a competitive moat that is challenging for an industry newcomer to replicate.
Profits are impressive. In 2025, PayPal generated $5.6 billion in free cash flow on $33.2 billion in total revenue. And in the last quarter alone, the business repurchased $1.5 billion of its common stock.
NASDAQ: PYPL
Key Data Points
Market sentiment about PayPal is unlikely to change
PayPal fired Alex Chriss, who was CEO from September 2023 through the end of February this year, probably because his initiatives, mostly centered on product innovation, weren't driving the desired levels of growth. That's not encouraging, since in theory, PayPal is in a strong position in the payments industry. For example, it processed $1.9 trillion in annualized total payment volume (TPV) in the first quarter of 2026. And the flagship PayPal and Venmo apps are two of the most popular digital wallets.
It's hard to be bullish that the current CEO, Enrique Lores, has what it takes to boost growth. A key part of his strategy focuses on achieving "at least $1.5 billion of gross run-rate savings over the next two to three years." But PayPal expects earnings per share to decline in 2026.
Growth remains the main problem. PayPal's online branded checkout solution saw TPV rise by 1% in Q4 and 2% in the first quarter on a year-over-year basis. Competition from Apple Pay, a consumer platform with 900 million global users, might suggest that PayPal's best days are behind it.
While it's impossible to ignore how cheap the shares have gotten, it's extremely difficult to be optimistic that PayPal's management team can do what it takes to reignite growth. Digital payments have been a durable tailwind, especially since the COVID-19 pandemic. And yet, PayPal, which has been at the forefront of this tech trend longer than anyone, hasn't been able to capitalize as much as investors had hoped.
Market sentiment is unlikely to change anytime soon. This makes PayPal look more like a value trap today.
