What's Fueling PayPal's Post-Earnings Skepticism?
The market reacted negatively to a slowdown in branded checkout Total Payment Volume growth and management's commentary flagging a 'slight softening' in U.S. retail spending, raising concerns about the immediate trajectory of key growth areas.
Following the release, Wall Street analysts provided assessments of PayPal's performance. Patrick Moley of Piper Sandler maintained a Neutral rating on the stock, setting a price forecast of $74.Meanwhile, Andrew Boone of Citizens JMP Securities reiterated a Market Outperform rating, though he adjusted his price forecast downward from $110 to $100.
Piper Sandler's Perspective
Moley described PayPal's second-quarter fiscal 2025 performance as a solid earnings beat, driven by stronger-than-expected transaction margins and a favorable tax rate.
The company reported an adjusted EPS of $1.40, which came in at $0.09 above the analyst's estimate and $0.10 above the midpoint of PayPal's guidance range ($1.29–$1.31).
Total Payment Volume (TPV) reached $443.5 billion, about 3% higher than projected, while transaction margin dollars exceeded the forecast by 2% (or $78 million).
Active accounts totaled 438 million, which is in line with expectations, with a slight sequential improvement in monthly active users of 52%.
In response to the beat, management raised full-year adjusted EPS guidance to $5.15–$5.30, implying 12.5% growth at the midpoint, up from prior guidance of $4.95–$5.10.
As a result, the analyst revised their EPS estimates upward, from $5.05 to $5.17 for fiscal 2025 and from $5.69 to $5.76 for fiscal 2026. However, the price target represented ~13 times the 2026 EPS estimate.
Despite the guidance raise, PayPal stock fell nearly 9% post-earnings, which Moley attributed to branded checkout TPV growth slowing to 5%, down from 6% in the first quarter (excluding leap day), and CFO Jamie Miller flagging a 'slight softening' in U.S. retail spending during the quarter. The analyst noted that these factors may have tempered buy-side expectations, even as consensus EPS forecasts are likely to rise.
Moley remains cautiously optimistic about PayPal's ongoing strategic shift to become an omnichannel commerce hub. However, he warned that executing this transformation could require continued investment that may soon pressure margins.
The analyst emphasized that success in branded checkout and Venmo remains central to restoring investor confidence. Venmo TPV grew 45% YoY, Venmo debit card monthly active accounts rose 40%, and overall Venmo revenue grew over 20%, reaffirming the platform's role as a critical driver of PayPal's long-term growth.
Moley projected third-quarter revenue of $8.06 billion and EPS of $1.18.
Citizens JMP Securities' Take
Boone described the company's second-quarter fiscal 2025 results as mixed, noting that while total payment volume (TPV) of $444 billion came in 2% ahead of estimates (+6% Y/Y, +5% ex-FX), transaction margin dollars (TM$) excluding interest slowed slightly, reflecting deceleration after adjusting for one-time items.
The company guided to similar TM$ growth for the third quarter, falling short of its high-single-digit target of 2027 at its analyst day. The analyst acknowledged PayPal's conservative guidance style but said the promised acceleration now appears more distant.
Despite these concerns, Boone highlighted progress in product innovation, particularly the new checkout experience (now covering 60%+ of U.S. transactions), Fastlane's substantial conversion uplift, and growing adoption of PayPal and Venmo debit cards, with 2 million new users added. However, with pro forma sales and marketing expenses jumping 38% Y/Y, the analyst wanted stronger growth as justification.
Boone's price forecast reflects 17 times projected 2026 GAAP EPS of $6.01 (down from 20 times). The analyst still views the stock's risk and reward as favorable given the company's relatively low multiple (~11.9 times 2026E EPS), ongoing buybacks, and increasing product-led growth momentum across branded checkout, Braintree, BNPL, and Venmo.
Boone expects growth to gradually reaccelerate as PayPal improves consumer and merchant experiences through initiatives like PayPal World, the new crypto payments feature, and global wallet expansion, positioning the company for stronger, more sustainable long-term performance.
Boone projected third-quarter revenue of $8.12 billion (prior $8.05 billion) and EPS of $1.18 (prior $1.15).
Price Action: PayPal stock was trading lower by 0.46% to $71.12 at last check Wednesday.
Image via Shutterstock
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