PayPal Holdings (PYPL) stock tumbled about 20% last Tuesday following disappointing Q4 results and weak fiscal 2026 guidance. Adding to the turmoil, the board announced that CEO Alex Chriss would be replaced by HP Inc. veteran Enrique Lores effective March 1.
Following the sharp selloff, analyst opinions remain deeply divided between those seeing a generational value opportunity and those warning of a structural value trap.
What Do Seeking Alpha Analysts Say About PayPal’s Future?
PayPal’s massive free cash flow generation of $6.4 billion in 2025 attracted some analysts, even with its recent issues. Similarly, these bulls pointed to the company’s aggressive $6 billion share buyback program planned for 2026.
The Bulls also highlighted Venmo’s 20% revenue growth to $1.7 billion and the stock’s historically low valuation of 7.6x forward earnings as providing significant margin of safety. At around $40 per share, bulls argued the free cash flow yield exceeding 16% should put a hard floor on the share price.
Bears, however, worried about a structural crisis in branded checkout, which saw growth slow to just 1% in Q4 compared to 5% in the prior quarter. Skeptics also noted that PayPal is losing significant market share to Apple Pay (AAPL) and Google Wallet (GOOG)(GOOGL), with the company now forced to negotiate and sacrifice economics just to maintain button placement on merchant websites.
The PYPL detractors also expressed concern that frequent CEO turnover indicates a lack of strategic continuity and suggests the turnaround story has failed to materialize.
Here’s a breakdown of what some analysts had to say:
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Daniel Schönberger, Rating: Strong Buy: “The undervaluation we are seeing right now is beyond words… beating down the stock towards a 7 times free cash flow multiple is extreme fear and a great investment opportunity, in my opinion.” – PayPal Seems Broken – And That Makes It A Strong Buy
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David Desjardins, Rating: Strong Buy: “My ‘Strong Buy’ rating reflects my view that PayPal offers a highly asymmetric risk-reward ratio at a price of around $40.00 per share. At one point, I would expect the significant free cash flow generation and strong balance sheet to put a hard floor on the share price.” – PayPal: An Overextended Sell-Off Creating The Perfect Buying Opportunity
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George Atuan, CFA, Rating: Hold: “The core business is struggling. Branded checkout has no moat as witnessed by competition continually forcing PayPal to defend button placement with pricing and incentives… I think this setup has value-trap vibes. Until I see clear proof that the core engine stabilizes, I’m not touching PYPL.” – PayPal: Cheap For A Reason As The Moat Disappears
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Danil Sereda, Rating: Hold: “Investors’ confidence—what has been left after years of PYPL’s price action deterioration—is now showing signs of structural impairment… I don’t see a reason for an actual reversal. Technicals will probably help PYPL bounce back up. However, that won’t solve the structural risks to the platform.” – PayPal Q4 Earnings Review: The Capitulation Bottom Or A Deep Value Trap?
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Kumquat Research, Rating: Sell: “Margins are expected to decline, expenses are expected to rise, EPS is projected to be negative-to-flat, free cash flow will likely be flat and capital expenditures will be minute relative to cash flow. These are all hallmarks of a business whose best days are behind it.” – PayPal Earnings: Time To Abandon This Sinking Ship
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James Foord, Rating: Sell: “PayPal’s main potential source of growth, branded checkout, has stalled, with Q4 branded checkout TPV growing just 1% and down from 5% QoQ… the business has failed to reinvent itself and continues to stagnate and lose market share.” – PayPal: Expensive At Any Price
What Do the Quant Ratings Say?
PayPal currently carries a Sell rating from Seeking Alpha’s quant system. The stock struggles with failing momentum and stalling growth, though it retains high marks for its underlying profitability.
Valuation: PayPal earns a D+ grade in valuation. While its forward P/E of 8 is significantly cheaper than the sector median of 12, suggesting the stock is undervalued relative to peers, this attractive multiple is overshadowed by deteriorating fundamentals.
Growth: The company receives a D+ grade in growth, with forward revenue growth projected at 4%, significantly below the sector median of 8%. This indicates a meaningful slowdown in the company’s expansion and performance.
Profitability: Profitability remains a bright spot with an A- grade, driven by a return on assets of 7% that substantially exceeds the sector median of 1%. This reflects the company’s effective use of its assets to generate earnings.
Momentum: Momentum receives an F grade, as the stock’s 49% one-year price decline drastically underperforms the sector’s 8% gain. This signals investor pessimism and a bearish outlook on the stock.
Earnings Revisions: The category earns a D grade following 38 downward revisions from analysts compared to only 3 upward revisions in the last three months, indicating analysts have reduced their earnings expectations.
What’s the Latest News on PayPal?
PayPal (PYPL) missed consensus on both revenue ($8.68 billion vs. consensus of $8.79 billion) and EPS ($1.23 vs. consensus of $1.29) in its Q4 report. Management withdrew its previously issued 2027 long-term targets and issued a cautious 2026 outlook, citing U.S. retail weakness and international headwinds, particularly in Germany.
For fiscal 2026, the company expects transaction margin dollars to decline slightly or remain roughly flat, while non-GAAP EPS could range from down low-single digits to slightly positive.
Meanwhile, the board appointed Enrique Lores, former CEO of HP Inc. (HPQ) and PayPal’s current board chair, as the company’s new president and CEO effective March 1. The leadership change comes as management acknowledged that “execution has not been what it needs to be, particularly in branded checkout.”
The 2026 strategic plan focuses on improving branded checkout execution, with a goal of bringing closer to 50% of consumers to “checkout-ready” status through biometric and passkey adoption by year end. PayPal faces intensifying competition from Apple Pay (AAPL), Google Wallet (GOOGL), Block (XYZ), Zelle, and Stripe, as transaction frequency per active account declined 5% year-over-year to 57.7.