PayPal Holdings PYPL shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month price-to-earnings (P/E), PayPal is currently trading at 8.53X, lower than the Zacks Financial Transaction Services industry average of 17.02X.
In comparison, peers like Visa V and Mastercard MA command richer valuations of 24.74X and 25.30X, respectively. The valuation gap highlights PayPal’s discounted positioning in the market, leading investors to question if it represents a compelling entry point.
However, valuation by itself doesn't ensure potential upside. PayPal faces macroeconomic headwinds and intense competition. Investors should evaluate how effectively the company addresses these hurdles, particularly through new product launches and ecosystem expansion. Connecting PayPal's core strengths to its discounted valuation is the best way to determine whether the stock offers genuine long-term potential.
Image Source: Zacks Investment Research
PYPL shares have gained 11.4% in the past three months compared with the industry’s growth of 6.7%, while the S&P 500 composite gained 7.1%. Comparatively, among its peers, Visa and Mastercard appreciated 13.4% and 3.9%, respectively, during this period.
Image Source: Zacks Investment Research
PayPal’s estimate revisions reflect a favorable trend for full-year 2026. The Zacks Consensus Estimate for 2026 earnings is pegged at $5.32 per share, implying a marginal rise over 2025.
Image Source: Zacks Investment Research
Let’s delve deeper into this to find out how to play the stock.
PayPal’s Strategic Partnership & AI Commerce Expansions
In May 2026, PayPal entered into a multi-year partnership with the Seattle Seahawks to serve as the team’s Official Fan-to-Fan Payments provider and the exclusive processor for digital ticket payments. This deal is PayPal’s first partnership with an individual NFL club. As part of the agreement, PayPal is integrated with Ticketmaster to enable streamlined season-ticket checkout and serves as the presenting partner of the “Seahawks Gameday Experience Program.”
PayPal is advancing its AI-driven commerce strategy by introducing agentic commerce, where autonomous AI assistants aid consumers in finding, assessing and buying products more efficiently. To bolster this effort, the company has teamed up with Microsoft via Copilot Checkout, OpenAI through ChatGPT and with Perplexity through the Perplexity Pro platform, creating smarter, more secure and more scalable shopping experiences for merchants and shoppers.
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 is further solidifying its role as a leading digital payments platform for younger, digitally native consumers. As consumers increasingly use Venmo for everyday purchases, it contributes a larger share of PayPal’s revenues. In the first quarter of 2026, Venmo’s total payment volume (TPV) rose 14% year over year, accelerating from the previous quarter and hitting a record high. This marked the sixth consecutive quarter of double-digit TPV growth.
The platform has continued to grow, surpassing 100 million active accounts. In March 2026, Venmo made its biggest expansion since launch by 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 increasing the platform’s international reach and addressable market.
Concerns to Note for PayPal
In the second quarter of 2026, the company expects low-single-digit revenue growth on a currency-neutral basis, a low single-digit decline in TM$, a low single-digit decline in TM$ excluding interest and a decline of high single digits in non-GAAP EPS. The company reiterated 2026 guidance, under which TM$ is expected to decline slightly. Non-GAAP EPS is expected to range from a low-single-digit decline to slightly positive.
Although PayPal’s online branded checkout TPV showed improvement in the first quarter of 2026, rising 2% sequentially on a currency-neutral basis, management still expects growth to stay muted. For full-year 2026, PayPal projects online branded checkout TPV to increase from slightly positive to low single-digit growth, reflecting a cautious outlook despite initial signs of stabilization.
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.
Conclusion: Maintain a Hold Stance on PYPL
PayPal’s strong first-quarter performance, strategic partnerships and Venmo’s continued expansion point to a promising recovery. Although competition is intensifying and guidance remains cautious amid macro uncertainty, the stock trades at a meaningful discount to peers, with a positive trend in earnings estimates revisions. That combination makes holding the stock the preferable choice.
PayPal currently carriers a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radical New Technology Could Hand Investors Huge Gains
Quantum Computing is the next technological revolution, and it could be even more advanced than AI.
While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.
Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power .
Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.
See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Mastercard Incorporated (MA): Free Stock Analysis Report
Visa Inc. (V): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).