PayPal stock plummets, triggering acquisition interest; selling institutions share their views

2026-02-23 21:57:36

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Investing.com – According to market sources, PayPal Holdings Inc (NASDAQ: PYPL) has sparked acquisition interest following a decline in its stock price.

Based on Wolfe Research data, the company’s current trading price is approximately 7 times its expected 2027 earnings per share. The firm notes that PayPal’s assets, including Venmo and its buy now, pay later business, are likely trading at a premium multiple, with a price-to-earnings ratio potentially reaching double digits. The company’s Braintree division may be valued at a different multiple.

Wolfe Research states that strategic acquisitions can create value through cross-selling opportunities and cost reductions. The firm believes PayPal’s unbranded payment processing business is the most likely asset to attract competitor interest, but also notes that the company has been working over the past two years to improve the profitability of this division before restoring growth.

Raymond James suggests that the likelihood of a recent acquisition is low. The firm considers potential buyers to include large tech companies such as Alphabet Inc (NASDAQ: GOOGL), Meta Platforms Inc (NASDAQ: META), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Apple (NASDAQ: AAPL). Private company Stripe could also be strategically significant, but Raymond James points out that the company’s financial information is limited.

The firm states that, given the expected transaction size exceeding $50 billion and an unclear exit strategy, private equity acquisitions seem unlikely. Raymond James estimates that at a purchase price of $55, the internal rate of return could reach double digits. The firm admits that potential buyers might consider acquiring specific assets, such as Venmo, rather than the entire business.

Mizuho maintains a buy rating on PayPal with a target price of $60. The firm states that the company’s current valuation is severely undervalued, at about 7 times the consensus EPS for 2027, compared to a five-year average of over 20 times. Mizuho notes that PayPal is one of the four globally recognized major payment networks, alongside Visa Inc (NYSE: V), Mastercard (NYSE: MA), and American Express (NYSE: AXP). The company processes nearly $2 trillion in payment transactions and operates a bilateral network with nearly 440 million active accounts, including Venmo’s peer-to-peer network and its growing buy now, pay later business.

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