PayPal Stock Trades Below Industry P/E: How to Play the Stock?

PayPal Holdings PYPL shares are trading cheap, as suggested by the Value Score of A. In terms of forward 12-month price-to-earnings (P/E), PayPal is currently trading at 10.24X, lower than the Zacks Financial Transaction Services industry average of 21.12X.

In comparison, peers Visa V and Mastercard MA command much richer valuations of 26.84X and 30.47X, respectively. The valuation gap highlights PayPal’s discounted positioning in the market, leading investors to question if it represents a compelling entry point.

Still, valuation alone does not guarantee upside. PayPal is navigating macroeconomic uncertainty, intensifying competition from fintech rivals and the need to accelerate innovation in a fast-changing payment landscape. For investors, the key lies in assessing how well the company is tackling these challenges, especially through new product and ecosystem development. Only by connecting PayPal’s fundamentals to its current discounted valuation can one gauge whether the stock truly represents long-term value.

PYPL shares have declined 10.6% in the past three months, compared to the industry’s 1% fall, while the S&P 500 composite increased 4.7%. Comparatively, its peers, Visa and Mastercard, put up a better performance in terms of share price during this period.

However, earnings estimate revisions tell a more encouraging story. PayPal’s estimate revisions reflect a positive trend for full-year 2025 and 2026. The Zacks Consensus Estimate for 2025 earnings is pegged at $5.34 per share, implying 14.8% growth over 2024. The consensus mark for 2026 earnings stands at $5.86 per share, indicating a 9.7% increase year over year. These upward revisions point to improving fundamentals that may not be fully reflected in today’s share price.

Let’s delve deeper into this to find out how to play the stock.

PayPal’s Strategic Partnerships & Other Initiatives

PayPal made some strategic moves to generate business. PayPal partnered with Logicbroker, allowing thousands of Logicbroker’s merchants to seamlessly activate PayPal’s agentic commerce services. Its partnership with Perplexity is the opening act of PayPal’s innovation in commerce for the agentic era. PayPal enabled its merchants to become discoverable in Perplexity, with seamless in-chat checkout powered by PYPL’s agentic commerce services. This collaboration brings to life the strategic partnership announced earlier this year, deploying PayPal as the commerce solution for the next generation of AI-driven retail. PayPal adopted the Agentic Commerce Protocol in partnership with OpenAI to expand payments and agentic commerce experiences in ChatGPT.

Similarly, Venmo and PayPal customers gain early access to Perplexity’s AI-powered Comet browser through a partnership announced in September 2025. This partnership also provides a complimentary 12-month Perplexity Pro subscription.

Apart from its partnerships, PayPal has invested in other initiatives that drive its growth. PayPal rolled out “PayPal links,” wherein users are able to send and receive money easily through a personalized, one-time link that can be shared in any chat or conversation. In other news, PayPal launched PayPal “Pay in 4,” a no-fee, buy now, pay later solution for Canadians.

Transforming PayPal Into a Broader Commerce Platform

PayPal has expanded beyond its original role as a payments company and is now transforming into a comprehensive commerce platform. This month, PayPal filed applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to establish a proposed Utah-chartered industrial loan company, PayPal Bank. Beyond offering small business lending solutions, PayPal Bank plans to introduce interest-bearing savings accounts for its customers. It also seeks direct membership with U.S. card networks to improve payment processing and settlements via existing banking relationships.

Additionally, “PayPal World” brings together several payment systems and digital wallets, such as PayPal, Venmo, Mercado Pago, Tenpay Global and NPCI’s UPI, on a single platform. Merchants benefit by gaining access to billions of new customers, while consumers gain universal wallet acceptance across borders.

The company is also deepening its push into agentic commerce through partnerships with Anthropic and Salesforce. Alongside these moves, PayPal is expanding its role in cryptocurrency with the PYUSD stablecoin and its “Pay with Crypto” option, positioning itself for relevance in emerging digital commerce trends. These efforts illustrate how PayPal is preparing to be a foundational player in next-generation payments.

PayPal’s Venmo Drive Growth

Venmo is positioned as the preferred money movement platform for the young, affluent and digitally native consumers. Venmo launched Venmo Stash, an innovative rewards program that is designed to give customers more value that grows with every interaction. Venmo joined hands with Bilt to expand how people use Venmo for everyday payments. Starting in early 2026, Bilt members will be able to pay their rent and mortgage, and shop at Bilt neighbourhood merchants, earning rewards along the way.

Venmo remains poised to deliver $1.7 billion in 2025 revenues, excluding interest income. This marks more than 20% growth and a 10-point acceleration compared to two years ago. Moreover, in the third quarter of 2025, the Venmo debit card hit a new record by attracting 1 million first-time users, partly driven by college partnerships. Monthly active accounts for the Venmo debit card rose more than 40% and “Pay with Venmo” monthly active accounts increased by about 25%. Revenue from Pay with Venmo and the Venmo debit card have doubled in the last two years.

How to Play the PYPL Stock?

PayPal's current valuation signals that investors are overlooking its substantial long-term growth prospects. The stock trades at a significant discount compared to its industry multiples and competitors such as Visa and Mastercard, presenting a compelling entry opportunity into this global payment leader. Although short-term challenges like macroeconomic uncertainty and rising competition persist, PayPal's improving earnings outlook, strategic partnerships, diversified growth initiatives and Venmo expansion provide solid grounds for optimism in its recovery path.

Although the recent sell-off has made PayPal’s shares appealing for long-term investors, it’s wise to remain cautious. At this stage, the stock seems better held and monitored closely rather than being a clear buy or sell opportunity.

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

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