Paypal shares up 1.7% pre-market ahead of earnings report release

Paypal shares up 1.7% pre-market ahead of earnings report release

PayPal Holdings (NASDAQ:PYPL) shares are up 1.7% in pre-market trading ahead of the company's second-quarter 2025 earnings report scheduled for release on Tuesday, July 29. Investors are closely watching the digital payment company as it navigates a challenging landscape characterized by slowing e-commerce volumes and heightened competition from other wallet providers.

Analysts expect PayPal to report earnings per share (EPS) of $1.30 and revenue near $8.1 billion, indicating a 2% year-over-year (YoY) increase. These estimates suggest a modest rebound from the company's first-quarter results, where total payment volume (TPV) grew by just 3% YoY, and operating expenses fell by 2% [1].

Investors are particularly interested in PayPal's ability to stabilize its branded-checkout mix against competitors like Apple Pay and Stripe. The company must also demonstrate that cost reductions, such as the $1 billion in annual savings targeted after cutting 2,500 roles, are on track to support the $6 to $7 billion free cash flow (FCF) goal and $6 billion buyback plan [1].

Moreover, PayPal's performance in the second quarter will be scrutinized for signs of growth in its crypto initiatives. The company's fee-free movement of PYUSD through Coinbase (NASDAQ:COIN) and the early success of Fastlane merchants with higher conversion rates could provide a boost to the company's earnings [1].

From a valuation standpoint, PayPal shares have declined 9% year-to-date and 19% below their December peak, making them relatively cheap compared to their peers. The stock is trading at a forward 12-month P/E of 14.35X, compared to the industry average of 22.21X [2]. This underperformance may be a reflection of broader macroeconomic pressures and uncertainty surrounding tariff policies [2].

Investors will be looking for evidence that PayPal can defend its premium to legacy processors and maintain its competitive edge in the digital payments market. The company's strategic reinvention, including the launch of PayPal World this fall, aims to expand its global wallet interoperability and reduce friction for cross-border commerce [2].

In summary, PayPal's earnings report on July 29 will provide critical insights into the company's ability to navigate a challenging market environment and execute its strategic initiatives. Investors will closely monitor the company's performance, particularly in areas such as branded-checkout mix, cost reductions, and crypto initiatives, to gauge its potential for future growth.

References:
[1] https://finance.yahoo.com/news/paypal-q2-2025-earnings-preview-122312403.html
[2] https://finance.yahoo.com/news/paypal-q2-earnings-preview-buy-154900225.html