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

We came across a bullish thesis on PayPal Holdings, Inc. (PYPL) on Emerging Value’s Substack. In this article, we will summarize the bulls’ thesis on PYPL. PayPal Holdings, Inc. (PYPL)'s share was trading at $74.61 as of 11^th June. PYPL’s trailing and forward P/E were 16.77 and 15.13 respectively according to Yahoo Finance.

PayPal’s Q1 2025 results delivered a mixed bag: revenue grew only 1%, TPV (Total Payment Volume) dropped 7% to 6.0 billion, though excluding the low-margin PSP segment, TPV rose 6%. Active accounts ticked up 2% to 436 million, a modest gain that softens enthusiasm. However, the bright spots: GAAP operating income jumped 31% to $1.5 billion and operating margin expanded nearly 450 bps to 19.6%.

The most profitable branded checkout (+6% TPV) and Venmo (+10%) segments are delivering strong volume growth, while PSP growth has slowed to 2% as PayPal trims its unprofitable Braintree business. Transaction margin rose 7%, fueling a 17% increase in value-added services revenue, driven by credit offerings and nascent ad products.

Looking ahead, Q2 EPS is guided to $1.29–$1.31 (+9%), with full‑year non-GAAP EPS growth forecast at 6–10%. Management positioned this conservatively, likely to under-promise and over-deliver. Opex cuts—particularly in support and admin—will moderate in 2025, while a $6 billion buyback (≈7% of market cap) bolsters EPS, though tax rate increases to 25% dampen net gains.

Strategically, PayPal is shifting from commoditized payments to a broader commerce platform, monetizing through credits, ads, AI-powered “agentic commerce,” B2B offerings, and “Fastlane” checkout. These initiatives aim to increase take‑rates and attach more services per user. While most effects won’t show until 2026+, the company’s strong unit economics, operating leverage, and strategic repositioning point to sustainable EPS growth—possibly in the low teens.

If PayPal sustains 12% growth and re-rates to ~20x, its ~2027 EPS of ~$6.40 gives a potential stock price around $128, compared to today’s ~$73. This presents a compelling long-term upside.

We previously covered a bullish thesis on PayPal (PYPL) that emphasized its accelerating transaction margins, AI-driven innovation, and momentum in high-value segments like BNPL, Venmo, and value-added services. The stock has appreciated by approximately 12.5 % since our coverage. A complementary view from Emerging Value echoes this optimism while adding a valuation-focused lens. Both theses agree on PayPal’s strategic pivot away from commoditized PSP volumes toward higher-margin branded checkout and integrated commerce.

PayPal Holdings, Inc. (PYPL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database,92 hedge fund portfolios held PYPL at the end of the first quarter which was 94 in the previous quarter. While we acknowledge the risk and potential of PYPL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.