Why PayPal Stocks are the second half of 2025 scream purchases

PayPal Holdings Inc logo and money via Sergio Photone Shutterstock

PayPal Stock (PYPL) has been riding bumpy for the first time since 2020. Inventory more than doubled in 2020, and continued to run well in the first half of 2021. 2024 was a welcome break for PayPal investors as the “Law of the Average” finally caught up with stocks. It scored a respectable 39%, surpassing the S&P 500 Index ($SPX) after a third consecutive year of inadequate performance.

Cut in 2025, PYPL stocks have already lost nearly 20%, again slowing down the wider market, which has recovered from its April low. As we research in this article, I think recent stocks in PayPal stocks are a good opportunity to buy.

PayPal started the year with a strong memo, but fell sharply after its fourth quarter 2024 revenue. The company posted revenue and profits that exceeded expectations quarter, with guidance slowing growth at Braintree ahead of estimates, and its subsidiary focused on card processing and reduced sentiment.

The tariff disruption didn’t help as fintech companies, including tariffs (AFRM) and PayPal, fell in April amid concerns that tariffs could lead to a recession and hurt businesses. Despite tariff concerns calming down (if not entirely) both of these stocks have not been recovered to their 2025 highs.

These are short-term headwinds, but PayPal faces several structural challenges in the form of higher competition across almost all business verticals. For example, check-outs of that brand face fierce competition between Apple Pay (AAPL) and Google Pay (Goog), while unbranded businesses face competition with companies like Stripe. The P2P business is also facing competition from the Zelle and Cash App (XYZ).

This competition has had a negative impact on PayPal’s top line, and is now growing in single digits. As competition intensifies, digital payment companies are putting pressure on take rates (the fees they charge for processing transactions), and PayPal’s operating margins are declining.

While we feel that corporate shifts are clichés, PayPal is a legitimate conversion under new CEO Alex Chriss, who is committed to profitable growth. The strategy shows results, with the company winning five quarters of profitable growth. PayPal also has entered digital advertising and leverages the vast amount of consumer data it has. The company also uses artificial intelligence to personalize the customer’s experience.

PayPal has transformed from a mere payment company into a “Commerce Company” and aims to become a bridge that connects more than 400 million users to merchants on the platform. During the day of investors earlier this year, Chriss said Pivot will help PayPal provide annual adjusted revenue (EPS) growth of 20% or more in the future.

PayPal’s investment papers are in three parts. The first is turnaround and conversion. This is an ongoing work that has been promising in this early turnaround stage.

The second is the rating, as PayPal’s current forward price revenue (P/E) is 13.5x multiples are well below the S&P 500 index. Also, despite the slowdown, the company’s revenues are still growing, with the growth multiple from 1.13x P/E looking very attractive.

Finally, despite all the challenges, PayPal is a free cash flow powerhouse, and expects to generate $6 billion to $7 billion in free cash in 2025. The company plans to use most of this cash flow to buy back the shares and spend $6 billion on this year’s repurchases.

Given PayPal’s current market capitalization is only $66 billion, the acquisition would theoretically help to raise EPS higher. PayPal’s cash engine is not expected to slow anytime soon, and will use 70%-80% of its free cash flow in the medium term.

The company’s balance sheet is also extremely formidable, holding more cash and investments than its debt. Overall, PayPal inventory proves easy at these levels and is being added to the company’s existing positions. It’s no longer a kind of growth story from a few years ago, but these ratings have a lot of comfort and turnarounds help to lead to a reassessment.

Seller-side analysts have seen a decent rise in PYPL stocks, with the average $80.50 target price 17.4% higher than the closing price on June 18th. However, there is a mix of street sentiment, and out of the 44 analysts covering stocks, 16 have a “strong buy” rating, with the 3-rate PYPL being rated as “medium buy.” 21 Analysts rate PayPal as “hold” and the remaining four will rate it as “strong sell.”

On the day of publication, Mohit Oberoi had positions in Pypl, AFRM, Goog and AAPL. All information and data in this article is for informational purposes only. This article was originally published barchart.com

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