PayPal Stock: Why Wall Street May Be Undervaluing This Giant

Key Points

• PayPal stock is down 21% YTD and trades at just 72% of its 52-week high, but fundamentals remain strong.
• Recent earnings showed EPS growth of 20%, driven by efficiency gains, while active accounts reached 438 million and payment volume rose 6%.
• Analysts and institutions are showing renewed optimism, with price targets as high as $100 and Amiral Gestion boosting holdings by 131%.

Some investors argue that the market’s pricing mechanism is efficient, with all available information already reflected in stock prices. But this is not always the case. Companies can fall off Wall Street’s radar, creating a disconnect between fundamentals and valuation. For bold investors, these moments present an opportunity to buy into undervalued stocks that have slipped out of favor.

PayPal Holdings Inc. NASDAQ: PYPL is a clear example. While the technology sector spotlight remains fixed on a handful of high-profile names, PayPal, a globally recognized brand, has been left behind. The stock trades at just 72% of its 52-week high, firmly in bear market territory. The question now is whether the market has mispriced PayPal’s prospects.

With the Federal Reserve beginning what may be a long-term easing cycle, both consumer and business spending could accelerate in the coming quarters. As a leader in digital payments, PayPal sits at the center of this shift, making its current valuation look increasingly disconnected from its true potential.

PayPal’s Decline Looks Overdone

Year-to-date, PayPal stock is down 21.2%, a drop that suggests deteriorating fundamentals. Yet a closer look at the company’s latest quarterly earnings shows the opposite.

Revenue rose 5% year-over-year to $8.3 billion. While modest, this growth came during a quarter marked by tighter budgets and tariff fears, making it a stronger performance than it appears at face value. Market share gains were evident, too, as PayPal added two million new PayPal and Venmo card users in the United States, bringing its active accounts to 438 million in Q2 2025.

More importantly, existing customers are transacting more. Total payment volume increased 6% year-over-year to $443.5 billion, showing that PayPal’s network effects are deepening.

Profitability also tells a different story than the stock price. By investing in more streamlined services, PayPal was able to turn 5% revenue growth into 20% earnings per share (EPS) growth. EPS came in at $1.40, beating the MarketBeat consensus estimate of $1.30 by 8%. With interest rates now trending lower, the company is well-positioned to continue beating expectations.

Analysts See More Upside

The current consensus price target for PayPal is $84.50 per share, which implies about 26% upside from today’s levels. But some analysts are far more bullish. Andrew Boone of JMP Securities has a $100 target, while Joseph Vafi of Canaccord Genuity stands at $96. These calls represent 48.5% and 42% upside potential, respectively, and reflect confidence in PayPal’s ability to grow earnings even in a slow macro environment.

The optimism is not limited to Wall Street analysts. Institutional investors are stepping in as well. In September 2025, Amiral Gestion boosted its PayPal holdings by 131%, raising its position to $23 million. That kind of increase signals conviction and reinforces the view that the market is undervaluing PayPal’s long-term potential.

Where PayPal Could Be Headed

Looking forward, Wall Street expects EPS of $1.54 for Q2 2026, about a 10% increase from PayPal’s most recent earnings beat. With the Fed’s easing cycle set to provide a tailwind for digital payments, PayPal could surprise again to the upside.

The company also benefits from its scale and stickiness. With 438 million active accounts and growing, PayPal has embedded itself into consumer behavior in ways new entrants struggle to match. As users transact more frequently, PayPal’s platform economics strengthen, creating a long-term growth engine that is not fully appreciated at today’s valuation.

For investors willing to take a contrarian stance, the current setup may look like a rare opportunity. With PayPal stock still well off its highs yet continuing to deliver steady growth, the disconnect between perception and reality is striking.

PayPal Stock Looks Undervalued Despite Recent Weakness

PayPal stock may have fallen out of favor, but its earnings growth, expanding user base, and institutional support tell a very different story. With price targets as high as $100, and the Federal Reserve providing a macro tailwind through lower rates, the stock looks undervalued relative to its fundamentals.

For investors seeking overlooked opportunities in the computer and technology sector, PayPal is worth a closer look.