TipRanks
6 min read
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PayPal Holdings (PYPL) stock is marching higher following the end of a highly contentious SEC probe. Since announcing the end of the SEC’s investigation at the start of May, PYPL stock has climbed ~30%. For PayPal, the end of the SEC’s probe removes a key regulatory overhang and paves the way for the leading tech platform to push deeper into blockchain-based payments and crypto. The company launched its branded stablecoin on the Ethereum network in 2023 as a dollar-pegged stablecoin backed by short-term U.S. Treasury bills.
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Moreover, the good news on the regulator front coincided with the company’s latest Q1 earnings results, which also supported PayPal’s growth story, making me rather optimistic regarding PayPal’s prospects. I’m particularly pleased with the payment pioneer’s strategy to expand profitably, enhance the user experience, and monetize key platforms such as Venmo. Notably, PYPL is implementing so-called “agentic commerce” to sustain its growth trajectory and appease shareholders clamoring for revenue growth. As a result, I’m staying bullish.
Despite current concerns regarding the macroeconomy, management’s cautious but consistent guidance and potential upside shifts from government policy anticipated in 2026 provide a reassuring outlook. With a tempting valuation at about 14x non-GAAP earnings, PayPal appears undervalued.
PayPal reported strong Q1 2025 results, highlighting robust earnings even as revenue growth was subdued. Revenue increased a mere 1% year-over-year to $7.8 billion, but non-GAAP earnings per share surged 23%. And this was no coincidence, as PayPal consciously rebalanced its business model to focus on profitable transactions rather than volume growth. The benefit was evident in their operating margin, which increased by more than 250 basis points.
What was encouraging was PayPal’s smart choices in processing payments. While total payment transactions fell a bit, branded checkout transactions grew. Venmo also did well, with revenue growing 20%, driven largely by more users making purchases with debit cards and more merchants accepting Venmo as a form of payment. These metrics show that PayPal is growing strategically in areas that matter.
Despite such strong results, PayPal was committed to conservative full-year guidance, projecting FY2025 adjusted EPS of $4.95 to $5.10. At first glance, that would seem cautious, but from my perspective, it’s astute. By establishing reasonable targets in an uncertain macro backdrop, PayPal is giving itself room to beat the numbers down the track. Should consumer spending and online payments pick up modestly, this guidance provides ample room for upside surprises.
