Pavlos D
Founder of Elliott Waves Trades, Checklist-Based Trading
PayPal is a value trap with a great story until a real catalyst appears. At about 8x forward earnings it is near a decade low and cheaper than JPMorgan, but cheapness has been the thesis for two years while it kept getting cheaper. A re-rating needs a trigger: a buyer, a turn in Venmo monetization, or price carving a higher low to prove the bleed is over. x.comÂ
PayPal's cost cuts and reserve releases prop up short-term numbers, while investing for growth wastes time. Its slow bleed gives delusional bulls hope, making it the ultimate value trap; it should not be a public company. x.comÂ
PayPal's near-flat growth and rising checkout competition leave it a Grade C, prove-it story. Q3 FY26 revenue rose just 2%; operating income fell 8% as restructuring charges rose from $69 million to $255 million, and net income fell 14%. The business still earns over $1 billion a quarter, but it is treading water. x.comÂ
PayPal's downside finally looks done after a 10-year round trip, leaving the stock undervalued at a P/E of 8 and a PEG ratio of 0.8. A solid Q2 report could start a recovery back to $60+. x.comÂ
PayPal faces structural disintermediation as agentic commerce and ecosystem wallets like Apple Pay and Google Pay erode its role as a checkout intermediary. Branded checkout grew just 1.0% in Q4 2025, a sign it is losing the buy button, despite over $6B of annual free cash flow. CEO Enrique Lores is pivoting to agentic infrastructure with ChatGPT, but with a $9B refinancing looming, PayPal looks a value trap until AI-first growth outpaces Apple and Google. x.comÂ
PayPal has proven a bad investment, and capital is better used in TransMedics and PROCEPT BioRobotics, whose valuations make no sense given how well their businesses are performing. Valuation models give PayPal about 40% upside versus over 100% for the other two, and no catalysts are in sight to take PayPal to $80. x.com x.com x.comÂ
PayPal is bound to catch up to its true worth sooner or later, trading under 10x trailing EPS on 40% annual growth, with a ton of free cash flow and an EV/EBIT around 6. Next week's earnings are the checkpoint for a possible long-term position. x.comÂ
PayPal's growth has stalled and it faces too much fintech competition. That view could change if the company adapts, pivots and proves otherwise. x.comÂ
PayPal deserves to be a $10 stock: its once-simple send-and-request app is now filled with promotions and ads on the home, accounts, activity and offers pages, making it nearly impossible to find the balance or send and accept money. x.comÂ
PayPal's raised earnings and free-cash-flow guidance supports rejecting Stripe and Advent's $60.50-per-share offer. The shares now trade around $57, below the rejected bid, but that does not make the rejection a mistake. x.comÂ
PayPal is worth shorting here because management will screw this up as it has every time, sending the stock back to the low $40s. x.comÂ
