PayPal shares extend losses to fall 2.1%

PayPal shares extend losses to fall 2.1%

PayPal (NASDAQ:PYPL) shares extended their recent losses, falling 2.1% on July 2, 2025. The decline comes despite the company's ongoing efforts to pivot its strategy and grow its enterprise solutions, including Braintree and Value-Added Services (VaaS). The stock's forward earnings multiple of 13x indicates that it is undervalued, presenting an opportunity for investors seeking discounted valuations [1].

PayPal's pivot toward high-margin enterprise solutions has driven growth, with VaaS revenue surging 16% year-over-year to $847 million in Q2 2025. The company's strategic shift includes embedding AI-driven tools into merchant workflows, transforming its role from a utility to a strategic partner for small and medium-sized businesses (SMBs). However, despite these efforts, the company's Total Payment Volume (TPV) growth has failed to turn around, impacting its top-line growth [2].

Institutional confidence in PayPal remains evident, with FCG Investment Co raising its stake by 26.4% in Q1 2025. The company's disciplined capital allocation, including a $6 billion buyback program that has already repurchased $1.5 billion worth of shares in Q1 alone, has enhanced earnings per share (EPS) through share count compression [2].

For PayPal to achieve a 20%+ upside by 2026, three key catalysts must align: Braintree's recovery, global wallet adoption, and AI-driven margin expansion. A successful pivot to enterprise solutions and a re-rating to 20x forward earnings could deliver a 20%+ return [1].

In conclusion, PayPal's current valuation discounts its potential as a dynamic commerce platform. At 13x forward earnings, the stock offers a margin of safety for investors willing to bet on its strategic execution. The company's $6 billion buyback program, coupled with its AI and global wallet initiatives, creates a flywheel effect: disciplined capital returns boost EPS, while innovation drives TPV and margin expansion.

References:
[1] https://www.ainvest.com/news/paypal-break-moment-discounted-opportunity-evolving-strategy-2508-43/
[2] https://seekingalpha.com/article/4816448-paypal-weak-tpv-trends-push-growth-recovery-out-to-2026