PYPL Stock Down 17.9% YTD: Is It a Buying Opportunity or Time to Exit?

PayPal Holdings PYPL has seen its stock tumble 17.9% year to date, weighed down by macroeconomic uncertainty and heightened competition in the digital payments space. Concerns over fraud in Europe, softening retail activity in the United States and tariff-related pressures in Asia have added to near-term volatility. 

Rivals Visa V and Mastercard MA are steadily broadening their services, challenging PayPal’s dominance in digital payments. Visa stock has gained 10.7%, while Mastercard has advanced 12.1% year to date.

Investors are now questioning whether PayPal’s struggles represent a deeper problem or an opportunity to buy into a long-term recovery story. Let’s delve deeper into this.

PYPL’s Strategic Transformation: Building the Next-Gen Ecosystem

PayPal is no longer just a payments company; it is steadily evolving into a broader commerce platform. The company recently unveiled “PayPal World,” a cloud-native, API-based initiative connecting PayPal, Venmo, Mercado Pago, Tenpay Global and NPCI’s UPI. This network could unlock interoperability across nearly 2 billion global wallet users. For merchants, it offers seamless access to billions of new customers, while consumers gain universal wallet acceptance across borders.

The company is also investing in AI-driven “agentic commerce” experiences in partnership with Anthropic and Salesforce, along with expanding crypto integration through its PYUSD stablecoin and “Pay with Crypto” option. These innovations extend PayPal’s relevance well beyond traditional payments, potentially positioning it as a foundational player in next-generation digital commerce.

PayPal’s Venmo and Branded Payments Drive Growth

Venmo continues to accelerate with revenues jumping more than 20% in Q2, while total payment volume (TPV) grew 12%, accelerating quarter over quarter to the highest growth rate in three years. Venmo debit card monthly active accounts surged 40%, and “Pay with Venmo” TPV soared more than 45%. This shift underscores how Venmo is evolving from a peer-to-peer tool into a mainstream commerce platform. Strategic partnerships, including with Big 12 and Big Ten athletic conferences, are embedding Venmo further into everyday spending.

Branded checkout remains another core driver. New checkout integrations are ramping up, and more than 60% of U.S. branded volume is now on PayPal’s upgraded experience. International rollouts in Germany and the U.K. are underway, promising further prospects. Together, Venmo and branded checkout represent PayPal’s strongest growth pillars, reinforcing its competitive positioning in both digital and in-store payments.

PayPal Shares Trading Cheap

However, with the decline, PayPal shares are trading cheap, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 12.53X compared with the Zacks Financial Transaction Services industry’s 22.19X. 

The stock is also cheaper than competitors, including Visa and Mastercard. Shares of Visa and Mastercard are currently trading at P/E of 27.51X and 32.66X, respectively.

PYPL’s Estimate Revisions Exhibit Positive Trend

PayPal’s estimate revisions reflect a positive trend for full-year 2025 and 2026. The Zacks Consensus Estimate for 2025 earnings is pegged at $5.22 per share, suggesting 12.3% growth over 2024. The consensus mark for 2026 earnings stands at $5.77 per share, calling for a 10.5% increase year over year.

PayPal: Opportunity in the Dip

Strategically, PayPal is focusing on four growth pillars: winning checkout, scaling omni and Venmo, driving payment services profitability, and investing in next-gen vectors like AI, ads and stablecoins. Venmo’s integration into mainstream commerce, PayPal World’s global expansion, and innovations in crypto and AI create optionality for revenue diversification in 2026 and beyond.

PayPal’s scale remains unmatched. With more than $443 billion in quarterly TPV, its global reach and merchant network offer resilience even when growth moderates. This combination of profitability, innovation and scale strengthens the long-term investment case.

While short-term risks are real, they do not derail PayPal’s multi-year recovery story. With a fortress balance sheet and multiple innovation levers in play, PayPal offers investors a compelling opportunity. The current weakness appears overdone relative to fundamentals. For long-term investors, PYPL looks more like a buy-the-dip opportunity than a time to exit.

PayPal currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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