PayPal Holdings PYPL stock has plunged 8.6% in the past three months, weighed down by weaker guidance, macroeconomic uncertainty and heightened competition in the digital payments space.
Rivalry in the digital payments space remains intense, with payment giants Visa Inc. V and Mastercard Incorporated MA continuing to expand their capabilities and presence across digital commerce, posing a growing challenge to PayPal. Visa stock has gained 5.6%, while Mastercard stock has fallen 2% in three months.
Investors are now questioning whether PayPal’s struggles represent a deeper problem or an opportunity to buy into a long-term recovery story. Let’s delve deeper into this.
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Why Do PYPL Shares Fall?
Although PayPal’s online branded checkout total payment volume (TPV) growth improved in the first quarter of 2026, increasing 2% on a currency-neutral basis from the prior quarter, management expects growth to remain subdued. For full-year 2026, PayPal is guiding online branded checkout TPV growth to be slightly positive to low single digits, reflecting a cautious outlook despite early signs of stabilization in the business.
In the second quarter of 2026, the company expects low-single-digit revenue growth on a currency-neutral basis, a low single-digit or approximately 3% decline in TM$, a low single-digit or approximately 2% decline in TM$ excluding interest, and a decline of high single digits or approximately 9% in non-GAAP EPS. The company reiterated 2026 guidance, under which TM$ is expected to decline slightly. Non-GAAP EPS is expected range from a low-single-digit decline to slightly positive.
Macroeconomic headwinds and intense competition in the global payments industry make PYPL susceptible to volatility. Additionally, the nature of the business makes it vulnerable to foreign exchange fluctuations.
PayPal’s Strategic Partnership & Next-Gen Transformations
In May 2026, PayPal signed a multi-year partnership with the Seattle Seahawks to become the team’s Official Fan-to-Fan Payments and exclusive digital ticket payment processing partner. This marks PayPal’s first individual NFL club partnership. The partnership integrates PayPal into Ticketmaster for seamless season-ticket checkout and makes PayPal the presenting partner of the “Seahawks Gameday Experience Program”.
PayPal is expanding its AI-powered commerce initiatives through agentic commerce, enabling autonomous AI assistants to help consumers identify, evaluate and purchase products more efficiently. To strengthen this effort, the company has partnered with Microsoft through Copilot Checkout, OpenAI via ChatGPT and Perplexity through its Perplexity Pro platform, creating smarter, more secure and scalable shopping experiences for both merchants and customers.
PayPal is also making dollar-backed stablecoin, PayPal USD, available in 70 markets worldwide in the PayPal account. It enables users to send funds globally with faster settlement and lower cost than traditional payment methods.
PayPal’s Venmo Drives Growth
Venmo continues to strengthen its position as a leading digital payments platform among younger and digitally native consumers. As adoption of Venmo for everyday purchases increases, it is becoming a more meaningful contributor to PayPal’s overall revenue mix. In the first quarter of 2026, Venmo’s TPV grew 14% year over year, accelerating from the prior quarter and reaching a new record level. The performance marked the sixth straight quarter of double-digit TPV growth.
The platform also continues to expand its scale, with more than 100 million active accounts. In March 2026, Venmo announced its largest expansion since launch, enabling global peer-to-peer payments through PayPal’s network. Venmo users can now send and receive money with hundreds of millions of PayPal customers across 90 markets, significantly broadening the platform's international reach and addressable market.
PayPal Shares Trading Cheap
However, with the decline, PayPal shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 7.48X compared with the Zacks Financial Transaction Services industry’s 16.72X.
The stock is also cheaper than competitors, including Visa and Mastercard. Shares of Visa and Mastercard are currently trading at P/E ratios of 22.32X and 23.21X, respectively.
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PYPL’s Estimate Revision Remains Unchanged
For full-year 2026, PayPal’s estimate revision remains unchanged. The Zacks Consensus Estimate for PYPL’s 2026 earnings per share is pegged at $5.30 over the past two months.
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How to Play the PYPL Stock?
PayPal's strategic partnerships, transformation initiatives and Venmo expansion provide solid grounds for optimism in its recovery path. The stock trades at a significant discount compared to its industry multiples and competitors such as Visa and Mastercard, presenting a compelling entry opportunity into this global payment leader.
However, short-term challenges like macroeconomic uncertainty and rising competition, along with weaker 2026 guidance, remain concerns. PYPL’s strong fundamentals and growth initiatives support patience. Therefore, it is better to wait before adding this stock to the portfolio, while long term investors who already have it, should hold.
PayPal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).