A Fresh Look at PayPal (PYPL) Valuation After Upbeat Q3, Dividend Launch, and Expanded AI Initiatives

PayPal Holdings (PYPL) delivered a solid Q3 earnings report and raised its 2025 outlook with confidence. Strong EPS growth, ongoing Venmo momentum, and Buy Now Pay Later gains were front and center for investors.

The company highlighted progress in AI-driven commerce, introduced new advertising initiatives, and maintained its commitment to meaningful share buybacks. Management also declared a dividend, pairing capital returns with new product launches and partnerships that could influence PayPal’s future growth profile.

See our latest analysis for PayPal Holdings.

Despite a series of upbeat headlines, including new dividend announcements, stronger earnings, and high-profile AI commerce partnerships, momentum has been hard to maintain for PayPal’s shares. The latest share price of $66.22 puts the stock down over 23% year-to-date, and its total shareholder return over the past year has slipped by more than 20%, continuing a multi-year trend of underperformance. While the company continues to invest for future growth, recent market skepticism is reflected in the price, setting up a potential disconnect between fundamentals and sentiment for patient investors.

If you’re on the lookout for what’s next or seeking fresh ideas outside payments, this could be a great moment to broaden your sights and explore fast growing stocks with high insider ownership

But with PayPal’s shares tumbling and valuation at multi-year lows, is the market overlooking the company’s underlying momentum, or is everything investors hope for already reflected in the price? Does this set up a real buying opportunity or not?

Most Popular Narrative: 37.1% Undervalued

Based on the most followed narrative by Zwfis, PayPal’s recent close of $66.22 is well below the projected fair value of $105.25. The story focuses on the company’s expanding business lines and bold growth goals, suggesting the potential for meaningful upside.

The biggest thing that makes me think PayPal is going somewhere is along the lines of their PayPal open, which is centered on merchants being able to use PayPal for transactions with customers. As they are able to gain more traction with this, they are bringing in two big sources of revenue and growth. The first is by having new or more businesses adopt PayPal's different tools for merchants to use them as a transactional service; that means that for every purchase within that company, PayPal will be earning a fee for every single use.

Read the complete narrative.

Curious how this fair value was built? The surprises are in the projected step-changes to both revenue mix and profit power over the next decade. One key assumption could dramatically change how Wall Street views PayPal’s future. Want a glimpse into the ambitious financial roadmap that justifies such a premium?

Result: Fair Value of $105.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowed growth in key revenue segments and competitive fintech innovations could challenge PayPal's ambitious projections and test investor patience in the period ahead.

Find out about the key risks to this PayPal Holdings narrative.

Build Your Own PayPal Holdings Narrative

If you see the story differently or want to dig into the numbers your own way, you can easily build and share your perspective in just minutes, so Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding PayPal Holdings.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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