Don't Buy PayPal's Stock Until These 3 Things Happen

MrDecoder · 2026-03-25T22:29:34+00:00

PayPal's stock has dropped nearly 40% due to slow account growth, declining transaction take rates, and rising expenses. To consider investing, it must improve account acceleration, stabilize take rates, and balance spending with revenue growth.

MrDecoder

2026-03-25 22:29:34

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PayPal (PYPL +1.39%), one of the world’s largest digital payment companies, was once a promising growth stock. However, its stock has declined nearly 40% over the past 12 months amid intense macro and competitive headwinds. While its stock might seem undervalued at less than 9 times this year’s earnings, I wouldn’t touch it unless these three things happen.

Image source: PayPal.

Its accounts growth accelerates again

Back in 2021, PayPal claimed it could reach 750 million active accounts by the end of 2025. It eventually walked back that ambitious goal, and its number of active accounts only grew from 426 million in 2021 to 439 million in 2025. That sluggish growth was caused by inflationary headwinds for consumer spending, intense competition from other digital payment platforms, and its decoupling from** eBay **from 2018 to 2023.

In the fourth quarter of 2025, PayPal’s active accounts grew only 1% year over year – compared with 1% in the third quarter and 2% a year earlier. I don’t think it will attract much attention unless its year-over-year accounts growth accelerates again.

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NASDAQ: PYPL

PayPal

Today’s Change

(1.39%) $0.61

Current Price

$44.83

Key Data Points

Market Cap

$41B

Day’s Range

$44.21 - $45.94

52wk Range

$38.46 - $79.50

Volume

474K

Avg Vol

24M

Gross Margin

41.78%

Dividend Yield

0.63%

It meaningfully grows its take rates

PayPal’s annual transaction take rate, or the percentage of each transaction it retains as revenue, has declined from 2.89% in 2015 to 1.66% in 2025 without a single year of growth.

That decline reflected pricing pressure from rival platforms and PayPal’s growing dependence on lower-margin services – including its unbranded payment processing platform, Braintree, and its peer-to-peer payments platform, Venmo – to offset the slower growth of its branded checkout services. Even if PayPal’s total payment volume (TPV) increases, declining take rates will throttle its long-term growth. PayPal has been trying to stabilize its take rates by downsizing Braintree, but that move will inevitably reduce its near-term revenues. That pressure will likely drive bargain-seeking investors away from PayPal’s beaten-down stock.

It balances its spending with its sales growth

For 2026, analysts expect PayPal’s revenue and earnings per share (EPS) to decline 12% and 4%, respectively. It expects the weakness of its branded checkout platform to reduce its top-line growth, and for its increased investments in new online and offline features to throttle its near-term earnings.

That mix of slowing sales growth and rising expenses makes it an unappealing stock to own in this wobbly market. But if those investments pay off and stabilize its top- and bottom-line growth, it could be worth accumulating as an undervalued turnaround play.

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