It's dirt cheap, but that's not the whole story.
Things have gotten ugly for PayPal (NASDAQ: PYPL). The payments giant has been struggling to grow, and its stock is 83% off its all-time high.
However, it still has a huge business and many opportunities. Let's see what went wrong, what's going right, and if the stock is undervalued at the current price.
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PayPal has 439 million active accounts and 231 million monthly active accounts as of the end of the 2025 fourth quarter. That gives it a first-mover's edge against competitors, but it also makes it harder to generate growth. Active accounts and monthly active accounts grew only 1% in 2025.
For a while, the company had shifted its focus to monetizing its existing customer base rather than winning new customers, but transaction growth per active customer has been on the decline over the past four quarters.
There are a plethora of new payment options that are gaining traction and capturing market share, and PayPal's historic lead is eroding, even though it's still the company to beat in digital payments. Companies like Alphabet and Apple, which have easy access to their users, offer competitive options. It has become a challenge for PayPal to maintain its lead, although it has been doing pretty much everything under the sun to boost growth.
PayPal's 2025 financial results were mostly positive. Total payment volume was up 7%, and revenue increased 4%. Adjusted earnings per share (EPS) rose 14%. However, it missed Wall Street expectations on the top and bottom line for the fourth quarter.
PayPal is also still working on boosting its branded business, which has higher margins than its unbranded business. Management has been measuring its profitability with a metric it calls transaction margin dollars. This demonstrates how profitable transactions are overall and that revenue growth is efficient. This metric increased 6% in 2025.
Even worse than the fourth-quarter miss was a disappointing outlook that called for slight declines in transaction margin dollars and EPS. Along with the results came the stunning announcement that relatively new CEO Alex Chriss is leaving, and HP CEO Enrique Lores is coming on board in the top spot. While that's exciting news, it wasn't enough to keep PayPal stock from plunging.