PayPal Holdings (PYPL) AI Stock Analysis

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PayPal Holdings

(NASDAQ:PYPL)

Rating:76Outperform

Price Target:

$80.00

▲(10.71%Upside)

PayPal's strong financial performance, particularly in profitability and cash flow management, is a key strength. The technical analysis and valuation reflect a stable but cautious outlook, with limited momentum and reasonable valuation. The earnings call underscores strategic growth in Venmo and omnichannel initiatives, although macroeconomic uncertainties pose challenges. These factors collectively support a solid overall score.

Positive Factors

Financial Performance

PayPal is poised to deliver durable low-teens EPS compounding and strong free cash flow.

Product Adoption

BNPL/Pay Later adoption is gaining traction, with users transacting 17% more and spending 33% more on average.

Negative Factors

Competitive Disadvantage

PayPal is at a competitive disadvantage to other digital wallets and payment service providers, lacking a differentiated unified commerce offering.

Growth Concerns

There is concern that results from the rollout of new branded experiences will take time to translate into TPV acceleration, and worry about PYPL's growth in U.S. online checkout.

PayPal Holdings (PYPL) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$70.28B

Dividend YieldN/A

Average Volume (3M)8.41M

Price to Earnings (P/E)16.2

Beta (1Y)1.32

Revenue Growth4.50%

EPS Growth12.82%

CountryUS

Employees24,400

SectorFinancial

Sector Strength74

IndustryFinancial - Credit Services

Share Statistics

EPS (TTM)1.33

Shares Outstanding972,532,840

10 Day Avg. Volume8,488,549

30 Day Avg. Volume8,406,249

Financial Highlights & Ratios

PEG Ratio-0.83

Price to Book (P/B)4.05

Price to Sales (P/S)0.00

P/FCF Ratio16.09

Enterprise Value/Market Cap1.21

Enterprise Value/Revenue0.67

Enterprise Value/Gross Profit5.87

Enterprise Value/Ebitda3.19

Forecast

1Y Price Target

$79.93

Price Target Upside10.61% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering32

PayPal Holdings Business Overview & Revenue Model

Company DescriptionPayPal Holdings, Inc. is a leading technology platform company specializing in digital payments, operating in the financial technology sector. It provides a suite of services that enable individuals and businesses to securely send and receive payments online. Its core products include PayPal, Venmo, and Braintree, which are designed to facilitate seamless transactions across different platforms and devices, offering both consumers and merchants a convenient and secure payment solution.

How the Company Makes MoneyPayPal makes money primarily through transaction fees charged to merchants when consumers make purchases using its payment platforms. These fees are typically a percentage of the transaction amount, along with a fixed fee based on the currency used. Additionally, PayPal earns revenue from value-added services, such as providing working capital and credit products to merchants and consumers. The company also generates income from partnerships, interest on certain customer balances, and subscription fees for enhanced services. Strategic acquisitions and partnerships, such as those with financial institutions and e-commerce platforms, further bolster PayPal's revenue by expanding its user base and transaction volume.

PayPal Holdings Key Performance Indicators (KPIs)

Any

Active Accounts

Active Accounts
Monitors the number of active user accounts, reflecting customer engagement, market penetration, and potential for transaction growth.

Chart InsightsPayPal's active accounts have shown a steady recovery after a dip in 2023, with recent growth aligning with strategic advancements highlighted in the earnings call. The surge in Venmo's monthly active accounts and revenue, along with PayPal's expansion of branded experiences, underscores a focus on enhancing user engagement. However, macroeconomic uncertainties and challenges in markets like the U.K. remain potential hurdles. PayPal's cautious guidance reflects these risks, despite strong performance indicators such as increased transaction margins and innovative product developments.

Data provided by:

Main Street Data

PayPal Holdings Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 11.29%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance and strategic advancements, particularly in Venmo and branded experiences. However, macroeconomic uncertainties and challenges in certain markets were acknowledged.

Q1-2025 Updates

Positive Updates

Record Earnings Growth

PayPal delivered its fifth consecutive quarter of profitable growth with non-GAAP earnings per share increasing 23% year-over-year.

Strong Transaction Margin Growth

Transaction margin dollars grew by 8%, excluding the impact of last year's leap day, driven by multiple sources including omnichannel commerce, Venmo, and PSP.

Venmo's Significant Revenue Growth

Venmo achieved 20% revenue growth, driven by increased monetization efforts and expanded merchant availability.

Expanding PayPal's Omnichannel Strategy

Branded experiences TPV grew 8% excluding last year's leap day, highlighting the success of PayPal's omnichannel initiatives.

Innovative Product Developments

PayPal introduced new initiatives in AI, personalization, and ads, as well as enhancements in crypto offerings with PYUSD rewards.

Negative Updates

Mixed Performance in PSP and Unbranded Volume

Unbranded volume via PSP grew only 2%, compared to 6% in the previous quarter, reflecting a shift away from unprofitable volume, which pressures gross revenue but is accretive to transaction margin dollars.

Macroeconomic Uncertainty Impacting Guidance

Despite a strong start to the year, PayPal maintained its full-year guidance due to macroeconomic uncertainty, including potential impacts from tariffs and global trading conditions.

Challenges in the U.K. Market

PayPal faced increased competition and regulatory challenges in the U.K., impacting the user experience and necessitating enhancements such as biometric authentication.

Company Guidance

In the recent earnings call for the first quarter of 2025, PayPal maintained its full-year guidance despite strong performance and several positive trends, citing macroeconomic uncertainties. Key metrics included a 23% year-over-year increase in non-GAAP earnings per share and a 4% growth in total payment volume (TPV) on a currency-neutral basis. The company achieved an 8% increase in transaction margin dollars, excluding the impact of last year's leap day. Branded experiences TPV grew by 8%, driven by omnichannel initiatives, with PayPal and Venmo debit card usage seeing significant growth. Venmo's revenue surged by 20%, and its monthly active accounts increased by 30%. PayPal plans to expand its upgraded online branded checkout and other innovations to Europe, aiming for further growth in the coming quarters. Despite these promising developments, PayPal remains cautious due to potential macroeconomic challenges and is closely monitoring consumer spending patterns and the broader economic environment.

PayPal Holdings Financial Statement Overview

Summary

PayPal maintains a strong financial position with robust profitability and efficient cash flow generation, supported by a balanced capital structure. The consistent revenue growth and solid profitability margins highlight effective management and market position. While the balance sheet shows moderate leverage, the company’s ability to generate strong returns on equity and manage cash flows effectively positions it well for future growth.

Income Statement

Very Positive

PayPal shows strong profitability with a consistent increase in revenue over the years, reflected in a positive Revenue Growth Rate from 2023 to 2024. Gross Profit Margin remains solid at 45.4% TTM (Trailing-Twelve-Months) indicating efficient cost management. The Net Profit Margin stands at 14.3% TTM, showing effective bottom-line profitability. EBIT and EBITDA margins at 18.1% and 20.8% TTM respectively denote strong operational efficiency. The company has maintained stable profitability metrics over time, reflecting a strong competitive position in the financial industry.

Balance Sheet

Positive

PayPal's balance sheet reflects moderate financial leverage with a Debt-to-Equity Ratio of 0.56 TTM, indicating a balanced use of debt in its capital structure. The Equity Ratio of 24.9% TTM shows a decent proportion of equity financing. Return on Equity is strong at 22.4% TTM, demonstrating efficiency in generating returns from shareholders' equity. While the company maintains a stable equity base, the slight decrease in Stockholders' Equity over time could be a concern if the trend continues.

Cash Flow

Very Positive

PayPal demonstrates healthy cash flow management with a strong Operating Cash Flow to Net Income Ratio of 1.47 TTM, indicating excellent conversion of net income to cash. The Free Cash Flow to Net Income Ratio is robust at 1.31 TTM, underscoring effective cash generation beyond capital expenditures. Free Cash Flow has shown variability, but the TTM data indicates a stable increase, suggesting effective management of capital investments and operational cash flows.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
31.87B	31.80B	29.77B	27.52B	25.37B	21.45B
	Gross Profit
14.45B	14.66B	13.70B	13.77B	14.00B	11.78B
	EBIT
5.78B	5.33B	5.03B	3.84B	4.26B	3.29B
	EBITDA
7.05B	6.74B	6.83B	4.99B	5.60B	6.46B
	Net Income Common Stockholders
4.55B	4.15B	4.25B	2.42B	4.17B	4.20B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
11.21B	10.82B	14.06B	10.85B	9.39B	13.08B
	Total Assets
81.27B	81.61B	82.17B	78.62B	75.80B	70.38B
	Total Debt
11.42B	9.88B	9.68B	10.42B	9.05B	8.94B
	Net Debt
3.97B	3.32B	595.00M	2.64B	3.85B	4.14B
	Total Liabilities
61.02B	61.19B	61.12B	58.35B	54.08B	50.32B
	Stockholders Equity
20.25B	20.42B	21.05B	20.27B	21.73B	20.02B
Cash Flow		Free Cash Flow
5.97B	6.77B	4.22B	5.11B	4.89B	5.35B
	Operating Cash Flow
6.69B	7.45B	4.84B	5.81B	5.80B	6.22B
	Investing Cash Flow
-3.05B	1.59B	752.00M	-3.33B	-5.15B	-16.55B
	Financing Cash Flow
-4.92B	-8.28B	-2.99B	-1.20B	-557.00M	12.45B

PayPal Holdings Technical Analysis

Technical Analysis Sentiment

Negative

Last Price72.26

Price Trends

50DMA

68.28

Positive

100DMA

71.08

Negative

200DMA

76.70

Negative

Market Momentum

MACD

0.86

Positive

RSI

47.19

Neutral

STOCH

19.42

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PYPL, the sentiment is Negative. The current price of 72.26 is above the 20-day moving average (MA) of 72.11, above the 50-day MA of 68.28, and below the 200-day MA of 76.70, indicating a neutral trend. The MACD of 0.86 indicates Positive momentum. The RSI at 47.19 is Neutral, neither overbought nor oversold. The STOCH value of 19.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PYPL.

PayPal Holdings Risk Analysis

PayPal Holdings disclosed 28 risk factors in its most recent earnings report. PayPal Holdings reported the most risks in the "Legal & Regulatory" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

PayPal Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
V	82 Outperform	$689.33B	36.16	50.03%	0.66%	10.19%	12.45%
MA	77 Outperform	$516.38B	39.89	188.92%	0.53%	12.94%	13.22%
PYPL	76 Outperform	$70.28B	16.21	22.20%	―	4.50%	12.82%
AXP	76 Outperform	$206.13B	20.55	34.02%	1.14%	8.45%	17.89%
SOFI	73 Outperform	$15.57B	33.48	7.51%	―	21.24%	―
WU	66 Neutral	$2.86B	3.21	136.84%	10.87%	-5.16%	59.60%
Sector *	64 Neutral	$12.87B	9.76	7.85%	78.04%	12.07%	-7.94%

* Financial Sector Average

Performance Comparison

PYPL

PayPal Holdings

70.67

11.55

19.54%

AXP

American Express

292.81

66.07

29.14%

Mastercard

569.45

121.97

27.26%

Visa

357.84

86.20

31.73%

Western Union

8.43

-2.85

-25.27%

SOFI

SoFi Technologies

14.43

8.01

124.77%

PayPal Holdings Corporate Events

Shareholder MeetingsBusiness Operations and Strategy

PayPal Stockholders Approve Key Proposals at Annual Meeting

Neutral

Jun 9, 2025

At the 2025 Annual Meeting of Stockholders held on June 5, PayPal Holdings‘ stockholders approved several key proposals, including the amendment and restatement of the 2015 Equity Incentive Award Plan, which increased the number of shares reserved for issuance by 15 million. Additionally, the stockholders elected 11 directors, approved executive compensation, and ratified the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2025. However, proposals regarding charitable giving and reducing the threshold to call special meetings were not approved. These decisions reflect PayPal’s strategic focus on enhancing shareholder value and maintaining robust governance practices.

The most recent analyst rating on (PYPL) stock is a Buy with a $72.00 price target. To see the full list of analyst forecasts on PayPal Holdings stock, see the PYPL Stock Forecast page.

Executive/Board ChangesShareholder Meetings

Rodney Adkins to Leave PayPal Board in April

Neutral

Apr 7, 2025

On April 4, 2025, Rodney Adkins informed PayPal Holdings, Inc. that he will not stand for re-election to the Board of Directors at the 2025 Annual Meeting of Stockholders. Adkins, who has been a director since September 2017, played a significant role in guiding PayPal’s growth and transformation, and his departure will lead to a reduction of the Board size to 11 directors. His contributions were highly valued by the company, as noted by Enrique Lores, Chair of PayPal’s Board of Directors, and Alex Chriss, President and CEO of PayPal.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.