PYPL flags softer Q4 branded checkout growth and rising 2026 OpEx as it pushes investments.
PayPal Holdings Inc (NASDAQ:PYPL, XETRA:2PP) shares fell on Wednesday after the company's finance chief warned that consumers are continuing to trade down, dampening expectations for growth in the key holiday quarter. CFO Jamie Miller told the UBS tech conference that average order values remain under pressure and that fourth-quarter branded checkout growth is running “a couple points” slower than the third quarter, even as the company maintained its overall guidance.
PayPal Holdings, Inc. (PYPL) Presents at UBS Global Technology and AI Conference 2025 Transcript
The payments company expects its branded checkout service to grow more slowly in the fourth quarter. Other segments look brighter.
PayPal delivers $6.4B in operating cash flow and a 24.36% ROE, more than doubling the sector median profitability. Shares trade at just 11.5x forward earnings and 8.52x cash flow, both deeply discounted, versus sector and historical averages. Capital returns surged with $1.5B in Q3 buybacks and $5.7B over twelve months, plus a new $0.14 quarterly dividend.
PayPal's sharp YTD slide contrasts with its push into next-gen commerce, AI, crypto and fast-growing Venmo, raising big questions for investors.
PayPal (PYPL) appears deeply undervalued, trading at just 11 times earnings and well below historical and peer valuations. PYPL's newly initiated dividend, robust $20 billion buyback program, and strong balance sheet highlight management's confidence and shareholder-friendly approach. Tax-loss selling and short interest may be pressuring shares, but fading selling and potential short covering could spark a January Effect rally.
PayPal (PYPL) may be a smart choice for your investment portfolio, due to its substantial cash yield, solid fundamentals, and affordable valuation. Companies of this nature can utilize cash to enhance revenue growth or simply return cash to shareholders through dividends or stock repurchases.
Recently, Zacks.com users have been paying close attention to Paypal (PYPL). This makes it worthwhile to examine what the stock has in store.
With its improving profitability, low payout ratio, and robust balance sheet, PayPal is exceptionally well-positioned to emerge as a dividend growth champion. PYPL's expanding financial services ecosystem further demonstrates its robust business outlook and growth potential. The stock is attractively valued with a FY2026 forward P/E ratio of just 10, making it appear undervalued.
PayPal is a buy after a recent selloff, with a raised price target of $100, representing over 65% upside from current levels. PYPL's fundamentals are improving under CEO Alex Chriss, with growth in TPV, revenue, and profits. Venmo's monetization and Braintree's return to profitable growth are key drivers, while product innovation and share repurchases enhance long-term value.
Shares of PayPal Holdings, Inc. (NASDAQ:PYPL) lost 13.35% over the past month after gaining 1.76% the month prior.