Hated Moats Investor
Contrarian Quality-Stock Research, 25 Years in Markets, GOOGL Since 2011
PayPal's management has shown steady incompetence: after more than five years of abysmal shareholder returns, it fumbled its last hope by declining Stripe's interest in acquiring it. @StockMarketNerd adds that the core business is in permanent decline, no buyback can fix that, and the stock deserves to be dirt cheap. 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 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 over $100 a share, but its current board will not get it there. x.comÂ
PayPal faces an existential competitive threat from X Money, which will kill its business. x.comÂ
PayPal options activity suggests traders are positioning for a longer-term move up, unless it is a hedge, so the stock should recover soon. The war has weighed on the shares. 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 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 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's problem is deeply rooted poor management and a complete lack of ambition; it could have made a dozen moves over the years to expand and grow. Stripe appears to be the only buyer willing to take it on. x.com x.comÂ