PayPal's Trading Volume Drops 40% Despite Strong Q1 Earnings and Strategic Shifts

On June 24, 2025, PayPal Holdings (PYPL) saw a trading volume of $489 million, marking a 40.08% decrease from the previous day. The stock price rose by 2.18%, marking the third consecutive day of gains, with a total increase of 7.31% over the past three days.

PayPal's Q1 2025 results presented a mixed outlook. While revenue grew by only 1% and Total Payment Volume (TPV) decreased by 7% to $6.0 billion, excluding the low-margin Payment Service Provider (PSP) segment, TPV actually rose by 6%. The number of active accounts increased by 2% to 436 million, indicating modest growth. However, GAAP operating income surged by 31% to $1.5 billion, and the operating margin expanded by nearly 450 basis points to 19.6%.

The most profitable segments, branded checkout and Venmo, showed strong volume growth of 6% and 10% respectively. In contrast, PSP growth slowed to 2% as PayPal streamlined its unprofitable Braintree business. Transaction margin increased by 7%, driving a 17% rise in value-added services revenue, primarily from credit offerings and emerging ad products.

Looking ahead, PayPal has guided Q2 EPS to $1.29–$1.31, representing a 9% increase, with full-year non-GAAP EPS growth forecasted at 6–10%. Management's conservative positioning suggests potential for under-promising and over-delivering. Operational expenditure cuts, particularly in support and administration, are expected to moderate in 2025. A $6 billion buyback, approximately 7% of the market cap, will bolster EPS, although a tax rate increase to 25% may dampen net gains.

Strategically, PayPal is transitioning from commoditized payments to a broader commerce platform. This shift includes monetizing through credits, ads, AI-powered "agentic commerce," B2B offerings, and "Fastlane" checkout. These initiatives aim to increase take-rates and attach more services per user. While most effects are not expected until 2026, the company's strong unit economics, operating leverage, and strategic repositioning point to sustainable EPS growth, potentially in the low teens.

If PayPal maintains a 12% growth rate and re-rates to approximately 20x, its 2027 EPS of around $6.40 could translate to a stock price of around $128, compared to the current price of approximately $73. This presents a compelling long-term upside.