Latest news with #PYPL
Yahoo
3 days ago
- Business
- Yahoo
Should You Buy the Post-Earnings Dip in PayPal Stock or Cash Out in PYPL Here?
PayPal's (PYPL) second-quarter results checked all the right boxes on paper. Growth came in stronger than expected, and Venmo once again proved its value to the platform, posting more than 20% revenue growth and driving a 12% surge in payment volume. Even so, the market reaction was anything but enthusiastic. PYPL stock dropped 8.7% after the report, bringing a sharper question into focus for investors: is this weakness an opening to buy the dip, or a sign to reassess? Part of the caution stemmed from what propped up some of the quarter's key metrics. Transaction margin dollars (TM$) — a closely watched gauge of core profitability — rose 7%, marking the sixth straight quarter of growth. But that headline figure was inflated by a one-time boost tied to the renewal and expansion of a major payment partner agreement. Excluding that, TM$ momentum showed early signs of tapering. More News from Barchart Palantir's Free Cash Flow Margins and Forecasts Rise - Where This Leaves PLTR Stock Cathie Wood is Buying Figma Stock with Both Hands. Should You Buy This Hot IPO, Too? Can SoundHound's Q2 Results Send the Stock Soaring on August 7? Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Management acknowledged that, while transaction revenue should continue to trend upward, other value-added services are facing more resistance. Interest rate headwinds and difficult year-over-year (YOY) comps in credit are expected to slow that side of the business in the quarters ahead. The selloff, then, was not a knee-jerk reaction. It reflected a more tactical adjustment to the underlying signals. Still, the broader narrative of PayPal's strategic reset remains intact. For investors with a steady hand and a long-term horizon, this dip might not be a red flag, but a potential entry point worth considering. About PayPal Stock Headquartered in San Jose, California, PayPal is among the most trusted names in global digital payments. It serves both consumers and merchants through a seamless transaction ecosystem anchored by its flagship products, PayPal and Xoom. Its peer-to-peer service, Venmo, has been pivotal in expanding the company's payment volume and deepening user engagement across demographics. With a market capitalization of $65 billion, the company remains a dominant force in fintech. Over the last 52 weeks, however, PYPL stock has underperformed, up 12% but trailing the Financial Select Sector SPDR Fund (XLF), which has gained 26% in the same period. The latest earnings miss triggered a sharper reaction. For the past five trading days, PYPL is down 5%, reflecting disappointment despite the beat. Valuation tells a more nuanced story. The stock trades at 12.8 times adjusted forward earnings and 2 times sales. These figures come in well below its own five-year averages, suggesting the market may be underestimating its earnings potential. PayPal Surpasses Q2 Earnings On July 29, PayPal delivered Q2 2025 results, handily surpassing consensus expectations. The company reported revenue of $8.29 billion, up 5.1% from a year earlier and ahead of analysts' forecast of $8.08 billion. Adjusted EPS hit $1.40, rising 17.6% YOY and beating the $1.30 per share estimate. The headline figures marked a clear win, but the underlying trends painted a more layered picture. Transaction margin dollars totaled $3.84 billion, rising 7% and extending the streak to six consecutive quarters of growth. Yet, when factoring out a one-time benefit from a strategic payment partnership, momentum showed signs of cooling. Meanwhile, adjusted free cash flow — one of the most closely watched figures in any fintech balance sheet — plunged 42.5% to $656 million. That was nearly two-thirds below analyst expectations and down from $1.4 billion in Q1. Still, some key metrics held firm. Total payment volume (TPV) stood at $443.5 billion, exceeding projections of $433.6 billion. Active accounts rose 2% to 438 million, nudging past expectations of 437.8 million. These gains suggest PayPal's core franchise remains intact, despite the margin pressure and rising costs. Looking ahead, management is guiding for Q3 adjusted EPS between $1.18 and $1.22. Transaction margin dollars are expected to grow by 4%, reaching between $3.76 billion and $3.82 billion. For the full year, adjusted EPS is now forecast between $5.15 and $5.30. The company also expects annual free cash flow between $6 billion and $7 billion, indicating confidence in its ability to rebound in the second half of the year. Meanwhile, analysts expect Q3 2025 EPS to come in at $1.20. For the full fiscal year 2025, the bottom line is estimated to grow 12.9% from the prior year to $5.25. Moreover, for fiscal year 2026, EPS is predicted to increase 9.9% from the previous year to $5.77. What Do Analysts Expect for PayPal Stock? Analysts are largely keeping faith in PYPL's recovery path. Canaccord Genuity has reaffirmed its 'Buy' rating on the stock, setting a target price of $96 following the Q2 print. The firm pointed to strength in Venmo and better-than-expected earnings as reasons to stay constructive on the name. Among 43 analysts covering PYPL stock, the consensus stands at 'Moderate Buy." Some 15 analysts maintain a 'Strong Buy" rating, two have a 'Moderate Buy,' 23 advise to 'Hold,' and three analysts recommend a 'Strong Sell" rating. PYPL stock's average price target of $81.14 represents potential upside of 20%. On the more bullish end, the Street-high target of $105 represents 55% potential upside from current levels. On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
5 days ago
- Business
- Business Insider
Why Investors Shouldn't Ignore the Bearish Case for PayPal Stock (PYPL)
Things have been tough for PayPal Holdings (PYPL) this year—and actually, for quite some time now. Since its peak in July 2021, the company has lost over 78% of its market value. While the past few years have been rough, nearly half of the more than 40% gains made in 2024 have already been wiped out this year. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. The main reasons boil down to challenges in turning user growth into real revenue, coupled with strong competition and shifting consumer behavior. The fundamentals are still solid, but the growth story isn't. As TipRanks data shows, PYPL stock has lagged the S&P 500 (SPX) by ~20% so far this year. Even the strong beat across the board in PayPal's Q2 results, published last week, wasn't enough to spark positive momentum. Concerns about heavy buybacks amid weak monetization—especially with merchants and Venmo—continue to hold the stock back. In short, recent performance suggests the market remains skeptical about PayPal, pricing in weak growth potential at least through this year, as the company sends mixed signals about how to allocate its capital for growth. That's why I'm sticking with a Sell rating on the stock. PYPL Undergoes Beat, Raise, and Drop Sometimes, not even checking off all the usual boxes is enough to lift a stock. I'm talking about beating EPS and revenue estimates, and raising both EPS and revenue guidance—the classic 'beat and raise.' PayPal did all of that in Q2 2025, and still, shares dropped by double digits after the announcement, piling up annual losses of more than 20%. And it's not like the beats were minor. EPS came in about 7.7% above analyst expectations, and revenue beat by 2.6%. PayPal also raised its full-year guidance for transaction margin dollars to between $15.35 billion and $15.5 billion—an annual growth of 5% to 6%. EPS guidance was raised to a range of $5.15 to $5.30, up 11% to 14% year-over-year, which is nearly 6% higher than what the market was expecting earlier this year, based on the mid-range. Even with some impact from the timing of working capital investments, PayPal stayed cash-flow positive in the quarter, generating $656 million in free cash flow—down 42% year-over-year, but primarily due to a one-off factor. Over the last twelve months, PayPal generated $5.7 billion in free cash flow, which implies an 8% yield. The company also bought back $1.5 billion in shares during the quarter, bringing the total over the past year to $6.5 billion — that's 115% of its annual free cash flow. So why the sell-off? The high FCF yield and aggressive buybacks suggest PayPal is focused more on returning capital to shareholders than investing in growth. That might be part of what's spooking the market—it's sending mixed signals, and investors aren't sure how to interpret them. The Roadblock to PayPal's Merchant Success But wait, there's more behind the bearish momentum. PayPal's investment thesis today largely hinges on its bright spot: Venmo—the company's main growth engine and a clear leader among younger users. The business has done really well in peer-to-peer (P2P) payments, with Venmo representing around 80% of PayPal's P2P volume. But lately, the market's excitement around Venmo seems to be cooling off. Let's start with competition. Apple Pay, Google Pay, Zelle, and to some extent Cash App, are all chipping away at PayPal's market share—especially in mobile and P2P transactions. On the surface, PayPal's Q2 2025 looked solid: active accounts rose by 2 million, total payment volume (TPV) grew 6% year-over-year, and Venmo TPV was up 12%. On top of that, strong cost control helped boost PayPal's total operating margins to 19.3%, up from 17.9% a year ago. But under the surface, it's not all that pretty. That 6% TPV growth is actually below PayPal's historical norms, and more importantly, the take rate fell to 1.68%, down 4 basis points year-over-year. In simple terms, PayPal is making less per dollar processed. And the main reason is its struggle with peer-to-merchant (P2M) payments—the real monetization engine. P2P, in general, doesn't make much money since it's often free or carries razor-thin margins. While both PayPal and Venmo have been trying to expand into customer-to-merchant payments, adoption has been limited. And a lot of that market has already been captured by competitors. Branded TPV—which includes PayPal Checkout, Tap to Pay, and debit cards—grew 8% year-over-year. But that's still not impressive when you compare it to platforms like Shopify, which is surging, or Apple Pay, which continues to see rapid adoption—especially among iPhone users. So, the bottom line here is that PayPal's monetization potential in P2M remains limited, even though that's where the upside lies. If they can successfully turn Venmo into a widely accepted merchant payment tool, it could be a major catalyst. But that's not what we've seen in 2025 so far—and definitely not in Q2. PYPL Still Discounted, But For a Reason That said, PayPal currently trades at a forward P/E of 13.2x, compared to its 2-year average of 14.2x—and still about 23% above the broader industry average. So while the stock is trading at a historical 7% discount to its own norms, it's also far from the highs it saw at the end of 2024, when the forward multiple touched ~20x during a more bullish market. The stock has rebounded a bit from recent lows, climbing back to around $68 per share—but that recovery hasn't been driven by excitement. The forward P/E has stayed subdued. To me, that says the bounce is more about earnings stability than renewed optimism. And that lines up with what we saw in the latest quarter: solid numbers, but still overshadowed by competitive threats and slow progress on monetizing Venmo. In the end, with the P/E sitting near the low end of its range, it looks like the market is pricing in PayPal's structural challenges in a pretty rational way—not just reacting emotionally to one quarter's results. Is PayPal a Buy, Sell, or Hold? There's been quite a bit of skepticism among Wall Street analysts about PayPal over the past three months. Out of the 25 experts covering the stock, ten are bullish, 13 are neutral, and two are bearish. PYPL's average stock price target stands at $83.53, which suggests a potential upside of ~24.5% from the current share price. PayPal's Growth Struggles Keep It on the Sell Watch The market has noticed that PayPal is missing key opportunities in merchant payments—struggling to convert Venmo users into merchant payers, which is where the real money is, not just in peer-to-peer transfers. While Venmo has been great for bringing in users, it hasn't translated into strong monetization growth, and that has overshadowed PayPal's strengths recently. Reversing these structural challenges won't be easy; it requires beating tougher competition, driving merchant adoption, and adapting to changing consumer habits. On top of that, the heavy deployment of cash toward buybacks suggests the management team has little clarity on how to tackle these headwinds. Even if the fundamentals remain solid and valuations stay historically discounted, momentum could remain stuck for a while if these issues aren't addressed. That's why I still expect PayPal to underperform the broader market at least through this year, and why I'm maintaining a Sell rating.
Yahoo
6 days ago
- Business
- Yahoo
PayPal Maintains its Huge FCF Guidance Despite a Q2 Drop - Is PYPL Stock Too Cheap?
PayPal Holdings (PYPL) reported that its Q2 free cash flow (FCF) fell 42% to just $656 million from $1.14 billion last year. However, it maintained guidance of between $6 and $7 billion FCF in 2025, on par with its 2024 $6.767 billion FCF. If that actually happens, PYPL stock could be undervalued. It could be worth over 30% more at $88.35 per share. This article will show why. More News from Barchart Chevron's Q2 Free Cash Flow Rises - CVX Stock Looks Cheap Option Volatility And Earnings Report For Aug 4 - 8 Coinbase (COIN) vs. Visa (V): Which One of These Stocks Flashing Unusual Options Activity Wins Out? Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. PYPL is at $67.75 in midday trading on Monday, Aug. 4. That's about $10 below its pre-earnings peak of $77.98 on July 24. Moreover, PYPL is still well below its Jan. 30 peak of $89.57. Strong Margins Except for Free Cash Flow PayPal's revenue rose +5.1% YoY to $8.288 billion, which was slightly higher (+2.56%) than analysts' estimates of $8.081 billion. Moreover, most of its margins were flat or slightly higher, except for free cash flow (FCF). For example, its all-important take-rate (i.e., revenue / total payment volume (TPV) fell just 2 basis points to 1.87% from 1.89% last year. That means that with higher TPV volume, PayPal is still able to 'take' its traditional fees from customers. In addition, its transaction margin (TM) (i.e., TM/revenue) rose just slightly to 46.38% from 45.76% last year. (Note the company talks about TM dollars up 7%, but this does not compare TM against higher revenue.) However, PayPal's operating cash flow (OCF) fell 41.1% from $1.525 billion last year to just $898 million. The deck said that this was affected by shifts in working capital timing (remember OCF includes addbacks to net income, one of which is changes in net working capital). After slightly higher capex, this led to a 49% drop in free cash flow (FCF) from $1.368 billion to $692 million. Its adj. FCF was 42.5% lower at $656 million. However, PayPal implied in its guidance that this was a one-off dip. In other words, the net working capital movements that led to a dip in Q2 will balance out later in the year. It maintained its outlook on page 14 of its Q2 presentation deck from last year that FCF would range between $6 billion and $7 billion. That would be on par with its 2024 FCF of $6.767 billion. So, if that happens, could PYPL stock be undervalued here? Let's look at its FCF yield metrics. Setting a Price Target Using FCF Yield PayPal does not pay a dividend to shareholders. But, if it did, the payment would be funded by its free cash flow. Let's just assume that it eventually pays out 50% of FCF to shareholders. What would the stock be worth then? Here is how we can work that out. Using the company's guidance (see above), we could expect at least $6.5 billion in FCF this year. That represents 19.7% of analysts' estimates of $33.03 billion in revenue this year. Moreover, next year they are projecting $35.05 billion, so FCF could rise to: $35.05 billion x 0.197 = $6.9 billion FCF 2026 That implies that its FCF yield is 10.68% given its market cap today of $64.59 billion (according to Yahoo! Finance). If PayPal paid out 50% of that to shareholders, that would equal $3.45 billion, or a dividend yield of over 5%: $3.45 billion dividends / $64.59 billion mkt cap = 0.0534 = 5.34% div. yield potential However, this may be too high a yield, and the stock's market cap might rise to lower this yield. For example, Stock Analysis shows PayPal has generated $5.3 billion in trailing 12-month (TTM) FCF. So, its TTM FCF yield is lower than 10.68%: $5.292b TTM FCF / $64.59b mkt cap today = 0.0819 = 8.19% TTM FCF yield Therefore, if PayPal paid out 50% of its FCF as a dividend, the equivalent dividend should be 4.095%: $3.45b 2026 div / 0.04095 = $84.25 billion projected mtk cap That is 30.4% higher than today's market value of $64.59 billion. In other words, PYPL stock is potentially worth +30.4% more than today's price of $68.04: 67.75 x 1.304 = $88.35 target price Analysts Agree PYPL Stock is Undervalued Yahoo! Finance shows that 43 analysts covering PYPL have an average price target of $83.26. That's +22% higher than today's price. Similarly, Barchart's survey shows an average of $81.14. Similarly, Stock Analysis shows that 33 analysts have an average price target of $83.00. However, which tracks recent analyst recommendations, shows that 35 analysts have an average price target of $89.04. That is closer to my price target of $88.35 above. As a result, the average survey price target from analysts is $84.11, or +23.6% higher than today's price. The bottom line here is that either using a FCF analysis or just from analysts' target prices, PYPL stock looks to be too cheap. One way to play this is to sell short out-of-the-money (OTM) put options. That way, an investor can get paid while waiting to buy in at a lower price. Shorting OTM PYPL Put Options For example, look at the Sept. 5 expiration period, 32 days from now (days to expiry or DTE). The $65 strike price put option contract has a midpoint premium of $1.03. This strike perice is 4% below the trading price (i.e., out-of-the-money or OTM). That means a short-seller of this put contract makes an immediate yield of 1.585% (i.e., $1.03/$65.00 = 0.015846). The investor first secures $6,500 in cash or buying power with their brokerage firm. Then they enter an order to 'Sell to Open' 1 put contract at $65.00 for expiry on Sept. 5. The account will then immediately receive $103.00 (i.e., $1.03 x 100 shares since each put contract represents 100 shares). So, the $103.00 income represents 1.585% of the $6,500 secured as collateral. As long as PYPL stays over $65.00 on or before Sept. 5, the account will not be assigned to buy 100 shares at $65.00. But, even if this happens, the net breakeven buy-in is just $63.97 (i.e., $65.00-$1.03). That is 5.9% or more below today's price, so it provides good downside protection. More risk-averse investors can sell short the $64.00 strike price put contract and still receive $79 for an investment of $6,400. That represents a 1.234% one-month yield. Note that there is a slightly lower delta ratio, -22%, or a 22% chance that PYPL will fall to this strike price. That is based on historical volatility. The bottom line is that investors can set a lower buy-in by shorting OTM puts. Moreover, existing investors in PYPL can earn a pseudo dividend yield here. For example, if this 1.585% short-put one-month yield play can be repeated over 3 months, the expected return yield is 4.755%. That is higher than our expected 4.1% annual dividend yield if PayPal were to pay out 50% of its FCF next year (see above). The bottom line is that PYPL stock looks deeply undervalued here. One way to play it is to short OTM puts in nearby expiry periods. On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-08-2025
- Business
- Yahoo
PayPal Stock Dropped 9% After Earnings. Is it a Red Flag, or a Buying Opportunity?
Key Points The recent selloff for PayPal stock could be an overreaction, given management's full-year forecast. Some lackluster results in some key metrics should give investors pause before buying. 10 stocks we like better than PayPal › Shares of financial technology (fintech) company PayPal (NASDAQ: PYPL) dropped 9% on July 29 after it reported second-quarter financial results. I believe it was a clear overreaction. Investors seemed to head for the exits after looking at PayPal's second-quarter free cash flow. In Q2, the company generated free cash flow of $692 million, which was down a whopping 49% year over year. That certainly looks troubling. In reality, PayPal had been expecting $6 billion to $7 billion in free cash flow in 2025. After reporting Q2 results, its expectations are unchanged. The 49% Q2 drop is simply a cash-flow timing issue, not a sign of something problematic. Consequently, I believe the 9% drop for PayPal stock was overdone. But is the drop in PayPal stock's price a buying opportunity? That's a question worth exploring. What's going right for PayPal PayPal is a low-growth business at this point with just 5% Q2 revenue growth. Active accounts were only up by 2%. But the company is turning some heads when it comes to profitability. When PayPal hired Chief Executive Officer Alex Chriss in 2023, he immediately took notice of the company's transaction margin. To win large accounts, the company had lowered its prices, particularly when it was working behind the scenes with unbranded checkouts. PayPal has renegotiated some of its top contracts since Chriss' arrival, and it's lifted how much profit it makes per transaction. In Q2, the company's transaction margin dollars increased by 7%, which was notably ahead of its 5% revenue growth. When it comes to the bottom line, it gets even better for PayPal. Management has aggressively bought back stock with its profits, lowering the share count and consequently boosting its earnings per share (EPS). Q2 EPS was up 20% year over year, which is something that shareholders love to see. Since early 2022, the share count for PayPal has steadily dropped, as the chart below shows. There are some caution flags out PayPal stock dropped 9% after earnings, as mentioned. It's also down 23% from 52-week highs, as of this writing. So, investors want to know if this pullback is a buying opportunity. After considering what's going right, some may be inclined to believe that it is indeed an opportunity. There is more to consider, however. First and foremost, PayPal's user growth has stalled. Active accounts were only up 2% in Q2. But more troubling was the 4% drop in transactions per active account on a trailing-12-month basis. The downward trend started in the first quarter, when transactions per account had dropped by 1% (after years of increases), but it looks like it's picking up steam now. With account growth stalling and transactions dropping, PayPal doesn't offer much to investors when it comes to revenue growth. That's why these are caution flags -- stocks that outperform the S&P 500 usually have above-average top-line growth. What's the verdict? While PayPal's recent growth leaves a lot to be desired, better growth could be around the corner. For starters, PayPal owns Venmo, and it accounts for 18% of the company's total payment volume -- a meaningful amount. Venmo's growth has accelerated in recent quarters. In the second quarter of 2024, Venmo's volume was only up 8% but it was up by 12% in Q2. This acceleration is promising. Moreover, PayPal just announced PayPal World, a partnership that will allow for interoperability with major digital wallets worldwide. Early joiners include Latin America's MercadoLibre and China's Tencent. This partnership could boost PayPal's adoption, but investors won't know for sure until after it officially launches this fall. For me, the verdict is that PayPal stock is a buy, with a caveat. The caveat is that I don't believe the company's current growth can lift the stock above the S&P 500 over the next five years. Shareholders need some of its growth initiatives to pay off. However, PayPal stock is low-risk. Its scale is vast, it's generating substantial free cash flow, and it's boosting shareholder value with stock buybacks. Even if growth continues to sputter, the company's EPS should increase modestly, lifting the shares. Because PayPal stock is down significantly from its 52-week high, there's a margin of safety with this investment. In conclusion, if things go as they are now, there may be little downside for investors. And if things get better due to things such as Venmo's growth, then it could be a market-beating investment. Should you invest $1,000 in PayPal right now? Before you buy stock in PayPal, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and PayPal wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,090,257!* Now, it's worth noting Stock Advisor's total average return is 1,036% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Jon Quast has positions in MercadoLibre. The Motley Fool has positions in and recommends MercadoLibre, PayPal, and Tencent. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy. PayPal Stock Dropped 9% After Earnings. Is it a Red Flag, or a Buying Opportunity? was originally published by The Motley Fool
Yahoo
02-08-2025
- Business
- Yahoo
PayPal Shares Sink Despite Upbeat Outlook. Is Wall Street Missing the Turnaround?
Key Points Its CEO is using new technologies such as artificial intelligence. Meanwhile, the stock is inexpensive at current levels. 10 stocks we like better than PayPal › PayPal Holdings (NASDAQ: PYPL) shares sank despite the company reporting strong second-quarter results on July 29 and issuing an upbeat outlook, as it continues its efforts to transform its business. The stock in down more than 19% year to date, as of this writing. This raises the question: Is the market missing a turnaround that appears to be happening right in front of its eyes? Let's dig into its second-quarter results to find out. Not the same old PayPal Chief Executive Officer Alex Chriss continues to work to transform PayPal from a simple payment platform into a full-fledged commerce platform. It's doing this both in old-school ways as well as leveraging new technologies such as artificial intelligence (AI). One simple way it is looking to become a full commerce platform is by moving beyond just e-commerce and its digital app. To this end, it has done something decidedly non-tech, issuing new physical credit and debit cards. It added 2 million first-time PayPal and Venmo debit card users in the quarter in the U.S., while increasing monthly active users by 65% and total payment volume (TPV) by 60%. It also launched a new physical card for PayPal Credit in the quarter. That doesn't mean the company isn't innovating on the technology side as well. It says it's working with leading AI companies, including Perplexity, Anthropic, and Salesforce. It also launched PayPal World, a platform that brings together some of the largest digital wallets in the world to let consumers easily connect with any merchant in the world. One of Chriss' other big priorities since taking over has been to focus on profitability rather than low-margin revenue growth. This was an issue with its unbranded checkout business, Braintree, before he took over, and he's been working to set the price based on its value to users. This has caused some churn but has been leading to better earnings growth. For the second quarter, revenue climbed 5% to $8.29 billion, while adjusted earnings per share (EPS) jumped 18% to $1.40. That easily topped the average estimate for adjusted EPS of $1.30 on revenue of $8.08 billion and was a big acceleration in revenue growth from the 1% in the first quarter. Transaction margin dollars, which are the profits it makes from each payment it processes (similar to gross profits), increased 7% to $3.84 billion. This has been one of the most closely watched metrics for the company. TPV rose 6% to $443.5 billion. Online PayPal branded checkout TPV rose 5% on a constant currency basis; while including its offline PayPal and Venmo debit cards, it rose 8%. Its unbranded Braintree TPV edged up 2%. Payment transactions dropped by 5% to 6.2 billion, while payment transactions per active account sank 4% to 58.3 on a trailing-12-month basis. This is largely due to the loss of low-margin Braintree transactions. Excluding third-party platforms that primarily use Braintree, such as Shopify, the number of payment transactions rose 6% and 4% per active account (the higher percentage reflects the exclusion of the 2024 leap day). Active accounts increased by 2% year over year to 438 million. Monthly active accounts also rose 2% to 226 million. The company forecast third-quarter adjusted EPS to be between $1.18 and $1.22, versus the $1.20 average of analyst estimates. It is looking for currency-neutral revenue increase of around 4% and growth in transaction margin dollars of 4% to a range of $3.76 billion to $3.82 billion. For the full year, it increased its adjusted EPS forecast to a range of $5.15 to $5.30, up from an earlier estimate of between $4.95 to $5.10, The new estimate represents 11% to 14% growth. It is looking for an increase in transaction margin dollars of 5% to 6%, to between $15.35 billion and $15.5 billion. Is it time to buy the dip? PayPal is clearly showing signs of a turnaround, executing on a number of fronts to be a better business. Venmo is producing strong growth, with revenue climbing more than 20%, and Pay with Venmo growth of more than 45%. Meanwhile, it's seeing more users adopt its physical credit and debit cards, and it's increasing its unbranded business' profitability. The company is innovating, and its global wallet initiative looks promising. However, the market is impatient and seems to want more. Investors with a little more patience are getting a solid in-progress turnaround play at a cheap price. The stock trades at a forward price-to-earnings ratio (P/E) of about 14 times 2025 analyst estimates and a 0.9 price/earnings-to-growth (PEG) ratio. Stocks with PEGs below 1 are generally considered undervalued. As such, I'd be a buyer of the stock on this dip, as it clearly seems Wall Street is missing the forest for the trees. Should you buy stock in PayPal right now? Before you buy stock in PayPal, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and PayPal wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,629!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,098,838!* Now, it's worth noting Stock Advisor's total average return is 1,049% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025 Geoffrey Seiler has positions in PayPal and Salesforce. The Motley Fool has positions in and recommends PayPal, Salesforce, and Shopify. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy. PayPal Shares Sink Despite Upbeat Outlook. Is Wall Street Missing the Turnaround? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
