PayPal (PYPL 11.39%) was one of the biggest winners of the pandemic years, as hundreds of millions of people were forced to shop online for goods and services, and to send money to friends and family without any physical contact. PayPal's business surged, and so did its stock price, reaching an all-time high of about $309 per share in July 2025.
Almost four years later, the stock trades for about $67 as of this writing. And to be fair, if you compare the numbers from 2021 and today, it's easy to see why.
NASDAQ: PYPL
Key Data Points
Looking at PayPal's first quarter 2021 earnings report, the last one released before the stock's all-time high, the company's total payment volume soared 50% year-over-year, adjusted EPS nearly doubled, and management added 14.5 net new active accounts during the quarter. At the time, PayPal had 392 million active accounts and management anticipated reaching 750 million within a few years.
Well, a few years later, PayPal has about 430 million active accounts, as growth came to a screeching halt when the pandemic died down. And here's how the growth numbers compared in the latest quarter:
|
Metric |
Q1 2021 |
Q4 2024 |
|---|---|---|
|
Total payment volume growth (year over year) |
50% |
7% |
|
Adjusted EPS growth |
85% |
5% |
|
Net new active accounts |
14.5 million |
2.6 million |
Data source: PayPal financials.
The turnaround is in its early stages
Looking at the chart, it shouldn't be surprising that the stock price is considerably lower now. But just over a year ago, PayPal replaced virtually all of its senior leadership, with former Intuit (INTU 9.65%) executive Alex Chriss tasked with restoring growth.
So far, the results have been strong. And to be sure, some of the growth metrics have substantially improved over the past year -- for example, PayPal actually lost net active accounts in 2023.
Chriss and his team initially focused on efficiency, and rolled out several initiatives in 2024 that could help reinvigorate growth. The creation of an advertising platform, which was launched in October 2024, is one example, and the company's new cash-back debit card product is one of the most competitive in the industry.
At PayPal's recent investor day, management gave a detailed look at its future growth strategies. As one example, doing a better job of monetizing Venmo is a big focus, and management believes it could achieve $2 billion in Venmo revenue by 2027. It has recently formed some big partnerships with retailers to allow customers to pay directly with Venmo accounts, and this could have lots of potential. The company also sees tons of potential to capture a significant share of the offline payment market, which management believes is a $200 billion revenue opportunity.
Beyond that, PayPal aims to consolidate its entire platform and focus on building its ecosystem. As an example, the average person who receives a person-to-person (P2P) payment generates $5 in annual revenue for PayPal. The average person who gets a P2P payment, uses online checkout, and has the PayPal debit card generates five times as much. Deepening relationships could be the key to long-term growth. Management has an ambitious vision to get the earnings growth rate above 20% over the long run, and this would be quite an accomplishment.
An incredible bargain if management can execute
To be perfectly clear, I don't think PayPal will surpass its $309 all-time high anytime in the near future. It might get there eventually, but we're years away.
Having said that, the stock looks like an absolute bargain at the current valuation. PayPal trades for about 13.3 times forward earnings estimates and about 11 times forward free cash flow, and the true valuation is even cheaper if we back out PayPal's net cash position on its balance sheet.
Speaking of cash flow, PayPal is a highly profitable business that is expected to generate about $6 billion in free cash flow in 2025. Management plans to use substantially all of it to buy back shares, a great indicator that the insiders think the stock is a good value. If management can achieve an earnings growth rate of 20% or more as it indicated at its recent investor day, it could end up being ridiculously cheap at the current price.
