PayPal Holdings, Inc. (PYPL): A Bull Case Theory

We came across a bullish thesis on PayPal Holdings, Inc. on Value Investing subreddit by strict_positive. In this article, we will summarize the bulls’ thesis on PYPL. PayPal Holdings, Inc.'s share was trading at $67.30 as of September 26th. PYPL’s trailing and forward P/E were 14.41 and 11.60 respectively according to Yahoo Finance.

PayPal Holdings, Inc. (PYPL) has seen a meaningful reduction in its share count over the past two years, declining by roughly 13% from 1.098 billion shares in 2023 to 955 million shares in 2025. This reduction, driven by consistent share buybacks and lower stock-based compensation (SBC), has coincided with an increase in the share price from $60 to $67.66, resulting in a slightly lower market capitalization today of $64.61 billion versus $65.88 billion in 2023.

For shareholders, this means each dollar invested now represents a slightly larger ownership stake in the company compared to two years ago, effectively creating more value per share. The share reduction also amplifies the efficiency of PayPal’s buyback program. For example, in the six months ended June 2023, PayPal repurchased 41 million shares at an average cost of $72.42, yielding 3.7% relative to the total company.

In the same period in 2025, the same number of shares repurchased at essentially the same price generated a 4.3% yield due to the smaller share base, demonstrating a compounding benefit if this strategy continues. Lower SBC has contributed further to this effect, declining from $768 million in 2022 to $573 million in 2025. This combination of buybacks and reduced dilution is enhancing shareholder value while making future repurchases more accretive.

If sustained, these actions could continue to create a snowball effect, increasing both ownership per share and the efficiency of capital deployment, potentially leading to steadily improving returns for investors without requiring an increase in overall buyback spending. The ongoing execution of this strategy will be key to monitoring PayPal’s long-term shareholder value creation.

Previously we covered a bullish thesis on PayPal Holdings, Inc. (PYPL) by Sergey in May 2025, which highlighted high-margin growth, AI integration, and strong performance across Venmo, BNPL, and offline commerce. The company's stock price has appreciated approximately by 1.47% since our coverage. The thesis still stands as PayPal continues to deliver durable profitability. Strict_positive shares a similar perspective but emphasizes accretive buybacks and share count reduction.

PayPal Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 89 hedge fund portfolios held PYPL at the end of the second quarter which was 92 in the previous quarter. While we acknowledge the potential of PYPL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.