The Zacks Analyst Blog Highlights PayPal, Visa, Mastercard and Coinbase Global

Globe and Mail

7 hours ago

For Immediate Release
Chicago, IL – July 1, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: PayPal PYPL, Visa Inc. V, Mastercard Inc. MA and Coinbase Global COIN.
Here are highlights from Monday's Analyst Blog:
What Does -13% YTD Drop for PayPal Mean: Buy, Hold or Sell?
PayPa l shares have dropped 13.7% year to date, largely due to intensifying competition in the fintech sector. Rivals like Visa Inc., Mastercard Inc., Apple Pay and Adyen continue to expand their offerings, challenging PayPal's dominance in digital payments. Broader macroeconomic pressures and uncertainty surrounding the tariff policy have also dampened investor sentiment.
Compared to its peers, PayPal's performance has been notably weaker. While PYPL has struggled, Visa shares have climbed 10.3%, and Mastercard has risen 4.5% over the same timeframe, highlighting PayPal's relative underperformance in a competitive and uncertain market environment.
However, before rushing to sell this stock or capitalize on the dip, it's crucial to assess whether PayPal has the growth potential and determine if the current challenges could meaningfully affect its performance.
Tailwinds and Challenges That Could Shape PayPal's Outlook
PayPal's evolution from a payments provider to a comprehensive, end-to-end strategic commerce partner, focusing on personalized experiences and leveraging data to create a dynamic smart wallet for consumers, marks a pivotal shift in its business model. The company is converging into a single PayPal platform to harness the full potential of its two-sided network, supporting both consumers and merchants. PayPal is positioning itself as a comprehensive commerce partner for merchants, expanding its role beyond that of a traditional payments processor.
PayPal's focus on enhancing branded checkout, person-to-person (P2P) services and Venmo has supported growth in active user accounts. In the first quarter of 2025, transaction margin dollars rose 7% year over year to $3.72 billion, driven by strong performance across omnichannel commerce, Venmo and Payment Service Provider ("PSP"). Venmo revenues surged 20%, contributing 18% to the total payment volume. The company remains on track with its intention to extend its successful U.S. omnichannel strategy to global markets, with NFC functionality scheduled to roll out in Germany during the second quarter and in the U.K. in the third quarter.
PayPal's Buy Now Pay Later ("BNPL") business is gaining strong traction, with first-quarter volume rising more than 20% and monthly active accounts up 18% year over year. BNPL users spend 33% more and make 17% more transactions, on average, highlighting its effectiveness in driving consumer engagement. To build on this momentum, PayPal is rolling out targeted awareness campaigns across key markets, including the U.K., Germany, Australia, France, Italy and Spain, aiming to drive broader adoption and reinforce its position in the BNPL space. This augurs well for long-term growth.
PayPal's growing network of strategic partners, including Coinbase Global, Fiserv, Adyen, Amazon, Global Payments and Shopify, is bolstering its growth outlook. Earlier this year, PayPal deepened its collaboration with Coinbase to accelerate the adoption, distribution and usage of its PayPal USD ("PYUSD") stablecoin, giving Coinbase users direct access to PYUSD.
However, while necessary, investments in product modernization (branded platform, AI), Venmo expansion and geographic rollout (NFC in Germany, UK omnichannel) are likely to keep weighing on margin improvement in the near term. Moreover, despite a strong first quarter, PayPal held steady on its full-year outlook, pointing to macroeconomic uncertainties such as geopolitical tensions and tariff-related risks as reasons for caution.
PayPal Shares Trading Cheap
PayPal shares are trading cheap, as suggested by the Value Score of B.
In terms of forward 12-month P/E, PYPL stock is trading at 13.74X compared with the Zacks Financial Transaction Services industry's 22.48X. The stock is cheaper than competitors, including Visa and Mastercard.
Shares of Visa and Mastercard are currently trading at P/E of 28.11X and 31.82X, respectively.
PYPL's Estimate Revisions Exhibit Positive Trend
PayPal's estimate revisions reflect a positive trend for the second quarter, as well as for the full years 2025 and 2026, though the same for the third quarter is not that impressive and is going south.
The Zacks Consensus Estimate for 2025 earnings is pegged at $5.08 per share, suggesting 9.25% growth over 2024. The consensus mark for second-quarter 2025 earnings is pegged at $1.30 per share, calling for 9.2% growth over the figure reported in the year-ago quarter.
Final Take on PYPL Stock
PayPal's strategic transformation is underway, supported by a broad user base, a trusted brand and a revitalized leadership team. Execution across core initiatives, from branded checkout and Venmo to BNPL and international omnichannel, demonstrates early success. However, stiff competition, a challenging macroeconomic environment and margin trade-offs temper the near-term outlook.
The stock is currently trading at a discount compared to its peers, but it may be wise to hold off on any decisions until there is more clarity on macroeconomic conditions and policy changes, as well as their potential effects on PayPal. So, it seems prudent for investors to wait for a more favorable point to start accumulating the stock. For existing shareholders, staying invested could be a reasonable choice, given the company's robust portfolio, expanding partner base and growth opportunities in the evolving fintech space.
PayPal currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Mastercard Incorporated (MA): Free Stock Analysis Report
Visa Inc. (V): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Coinbase Global, Inc. (COIN): Free Stock Analysis Report