On July 15, news broke that fintech company Stripe and private equity firm Advent International made a $53 billion offer to buy PayPal (PYPL +0.83%). This proposal was $60.50 per share, and although PayPal's stock had its best month ever in July, rising more than 32%, it hasn't come close to touching the proposed per-share offer since December 2025.
As of market close on Aug. 4, PayPal's stock was $58.54, 3.24% below the bid its board of governors turned down. With the stock still floating below the offer a few weeks after it was proposed, what should investors read into it?
NASDAQ: PYPL
Key Data Points
Why PayPal turned down the initial offer
The simple answer is that PayPal's board felt Stripe and Advent's offer was insufficient. The more nuanced answer is that right now it doesn't make sense to accept an offer that isn't "too good to be true" because the company is in the middle of a turnaround.
PayPal just appointed a new CEO, Enrique Lores, in February, hoping he could lead a turnaround. With only five full months in the role (he began March 1), selling the company now could seem like throwing in the towel.
This is especially true after a promising second quarter, in which PayPal's revenue increased 8% year over year to $8.7 billion, total payment volume increased 10% to $486.4 billion, and its adjusted free cash flow surged 179% to $1.83 billion.
Granted, PayPal's net income and operating income decreased 11% and 8% year over year, respectively, but that isn't too shocking.
Image source: The Motley Fool.
What the ongoing discount to the offer means
Consistently trading below an offer price that was turned down creates an interest dynamic. On one end, if Wall Street felt that Stripe and Advent were going to return soon with a higher offer (say, $70 per share), then they would likely bid the shares up closer to the offer price. This comes off as a cautious "show us you're more valuable than the offer" stance.
On the other hand, PayPal's current price isn't too far off from the offer price, which sets a much higher valuation floor than the mid-$40s it was trading at before the offer was made.
If you're looking to invest in PayPal, it shouldn't be because of buyout hopes -- those could be far away. It should, however, be because of the company's stand-alone potential and solid balance sheet. PayPal is sitting on $1.53 billion in cash, cash equivalents, and investments, and has spent $6 billion on share buybacks over the past year.
Both of those are encouraging signs that PayPal feels undervalued. It still has some kinks to work out, but it's in much better standing than it has been recently.
