PayPal at a Crossroads: Undervalued Comeback or Value Trap?

PayPal is in crisis: Despite solid figures and new growth initiatives, its stock is plummeting. Analysts are skeptical, while the fintech company is countering the trend with AI and global networking.

Analysts point to the red card

Sentiment on Wall Street is subdued. Several major analyst firms, including Susquehanna and Goldman Sachs, recently lowered their price targets for PayPal. The prevailing recommendation is “Hold”—a clear sign of uncertainty about the payment giant’s near future.

The reasons for the skepticism are manifold. Growth in traditional online checkouts (branded checkout) is slowing. Even in key markets like Germany, e-commerce sales are declining. Critics accuse the company of being too slow to adapt to new technologies. It’s no wonder, then, that the stock is trading near its yearly low, significantly underperforming both the S&P 500 and the financial sector.

On a related note: Many users are unsure how to properly use features like buyer protection, sending money, or security settings. The free PayPal Starter Kit explains the setup process step by step, including buyer protection, and provides five expert tips to help you process payments securely and stress-free. Illustrated instructions will get you started in minutes – ideal for online shoppers and beginners.

The figures: A mixed picture

However, the fundamental situation is less bleak than the share price suggests. Last quarter, PayPal exceeded analysts’ expectations for both revenue and earnings per share ( EPS ). For the current quarter, earnings of $1.29 per share are expected – an increase of 8.4 percent year-over-year.

For the entire fiscal year 2026, analysts are even forecasting a profit jump of almost 15 percent. Further revenue growth is also expected. The discrepancy between these solid fundamentals and the weak stock market performance is striking. PayPal is currently trading at a significantly lower price-to-earnings ratio than the broader market. Is there an opportunity here?

PayPal restart with AI and global networking

Under pressure, PayPal is relying on new strategies. Its greatest hope lies in the “PayPal World” initiative, slated to launch this year. The goal: to connect international wallets and payment systems. Through partnerships, PayPal could gain access to over two billion users and thereby generate hundreds of millions in additional revenue.

In parallel, the company is pushing ahead with the use of artificial intelligence. At CES 2026, PayPal unveiled a new analytics program for transactions and integrated advertising features. A partnership with Microsoft is also intended to enable “Copilot Checkout.” These steps are crucial for transforming itself from a pure payment processor into a diversified fintech service provider and competing with Apple Pay, Stripe, and others.

A security or a value trap?

The key question for investors is: Is PayPal an undervalued technology pioneer or a company that is squandering its innovative edge? The low valuation suggests that much pessimism is already priced in. The company’s multi-billion-dollar share buyback program could support the stock in the long term.

However, the persistently negative sentiment, especially among retail investors, is a significant counterargument. The dramatic price drop from its all-time high demonstrates how difficult it is for PayPal to regain market confidence. The success of “PayPal World” and its AI products will determine its future direction.

Waiting for the turning point

The next few months will be crucial for PayPal. The next quarterly report will be closely scrutinized to determine whether a turnaround is emerging in user growth and transaction volumes. Investors want to see concrete results from the new initiatives.

According to the average analyst target, the stock could offer significant upside potential. However, whether this potential is realized depends solely on whether PayPal can prove to the world that it still plays a leading role in the fierce competition among digital companies. The market is now demanding action.

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(Featured image by Brett Jordan via Unsplash)

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