PayPal (PYPL) is due to report its first-quarter financial results on May 5 before the market opens. The digital-payments giant reported Q4 results that were disappointing in many respects, and its Q1 earnings are not expected to be particularly impressive. Moreover, PYPL could be hurt by weakening consumer spending going forward.
But with the shares changing hands at an extraordinarily low valuation and the company appearing to be well-positioned to benefit from increased use of artificial intelligence (AI) and a new CEO going forward, long-term value investors looking for a good tech stock to buy should consider purchasing PYPL stock. Also importantly, there's a good chance that the shares will get a big boost from a strategic transaction down the road.
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About PayPal Stock
Headquartered in San Jose, California, PayPal’s products enable digital payments to simplify commerce experiences for consumers and merchants. The company’s two-sided platform serves merchants and consumers on a global scale.
The shares have a market capitalization of $43.38 billion and a trailing price-to-earnings (P/E) ratio of 9.5x.
www.barchart.comWeak Q4 Results and Low Expectations for Q1
Although the company's revenue increased 3.7% in Q4 versus the same period a year earlier to $8.68 billion, its earnings per share (EPS), excluding certain items, advanced just 3% year-over-year to $1.23, while its transaction margin increased only 3% year-over-year to $4.03 billion. And the number of its active accounts inched up just 1% year-over-year, while the number of its payment transactions similarly rose just 2% year-over-year.
Meanwhile, analysts on average predict that its EPS sank 4.5% year-over-year in Q1, and the mean estimate calls for a year-over-year increase of just 3.4% in sales.
Positive Potential Catalysts
PayPal's forward P/E ratio of 9.4x is extremely low. Further, in February, the company named a new CEO, Enrique Lores, who had the same title at HP (HPQ) from November 2019 until February 2026. HP's shares rose from around $20 when he took over to around $40 in May 2022 and about $37 in August 2024. That's a fairly impressive performance, considering that HPQ is not much of a growth name. Given Lores' record at HPQ, he may be able to boost PYPL stock significantly.
As part of a reorganization of the firm, Lores appointed Anshu Bhardwaj, who previously served as the CEO of Walmart's (WMT) Commerce Technologies unit, as PYPL's Chief AI Transformation and Simplification Officer. Since Walmart is known for its highly effective use of AI, Bhardwaj may be able to greatly enhance PayPal's use of the technology.
Moreover, Lores has decided to separate Venmo, PayPal's payment business that is growing much faster than the company as a whole, from the firm's other unit, CNBC reported. In 2025, Venmo's revenue jumped 20%, and its total payments volume climbed 13% year-over-year in Q4. In February, Bloomberg reported that a number of firms were interested in buying “parts or all of the company,” and PYPL is reportedly looking to fend off their overtures. In order to accomplish the latter goal, the firm could spin off Venmo.
In recent years, investors have profited handsomely from several spinoffs, with SanDisk (SNDK), Grail (GRAL), and GE Vernova (GEV) having soared tremendously after they were spun off from their parents. Venmo could very well follow suit, earning big profits for those who own PYPL stock now. Alternatively, PYPL could decide to sell itself at a significant premium to its current price.
On the date of publication, Larry Ramer had a position in: GRAL . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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