Forget the Lawsuit: Here’s How PayPal Could Double From Here

By Trey Thoelcke Published Mar 16, 10:35AM EDT

Quick Read

PayPal (PYPL) trades at 8.3x trailing earnings with a PEG ratio of 0.705 and 25.7% return on equity, down 81.97% over five years despite processing $475.13B in total payment volume in Q4 2025 (up 9% year-over-year), while FY2025 free cash flow reached $5.56B and management deployed $6.0B in buybacks retiring 86M shares. Mastercard (MA) included PayPal in its Crypto Partner Program, adding optionality through the PYUSD stablecoin initiative.
PayPal’s severe stock decline has created a valuation disconnect from underlying business fundamentals, as institutional investors (83.6% ownership) and smart money quietly accumulate stakes while shorts cover 19.2% of positions.

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Forget the Lawsuit: Here’s How PayPal Could Double From Here — © denphumi / iStock via Getty Images

PayPal (NASDAQ: PYPL | PYPL Price Prediction) is trading at 8.3x trailing earnings with a PEG ratio of 0.705 and a return on equity of 25.7%. Contrarian analysts have noted the compressed valuation.

The stock has been punished severely. PayPal is down 81.69% over the past five years and 33.79% over the past year, now trading near $45 a share. That destruction has created a valuation that fails to reflect the underlying business. The analyst consensus price target is $50.23, while Simply Wall St pegs fair value at $82.00.

Three Factors Analysts Are Watching

Valuation is compressed beyond reason. FY2025 non-GAAP EPS came in at $5.31 against a stock price in the low $40s. The forward P/E is 8.53, a multiple more consistent with a declining legacy business than a company processing $475.13 billion in total payment volume in Q4 2025 alone, up 9% year-over-year. EV/EBITDA stands at just 5.31.

The cash machine is intact. FY2025 free cash flow reached $5.56 billion, and management deployed $6.0 billion in buybacks over the trailing 12 months, retiring roughly 86 million shares. A $0.14 quarterly dividend is due March 25, 2026—the company’s inaugural dividend program, signaling management confidence even through turbulence.

Smart money is quietly accumulating. Short interest fell 19.2% in February to 41.84 million shares—shorts are covering. Meanwhile, Clear Street initiated a $17.75 million position, Quinn Opportunity Partners increased its stake 17.4%, and Ossiam added 22.8%. These are not momentum buyers. And with institutional ownership at 83.6%, the base is sophisticated.

The Lawsuit Risk Is Already Priced In

Yes, multiple securities class action suits have been filed following the Q4 miss, with a lead plaintiff deadline of April 20, 2026. The stock already absorbed a roughly 20% decline and approximately $9 billion in market cap destruction at the announcement. The litigation reflects backward-looking guidance disputes, not a broken business model. FY2025 net income grew 26.19% year-over-year to $5.23 billion. New CEO Enrique Lores, whose RSU vesting in March tied over 1.1 million shares to long-term performance, arrives with a clear execution mandate and significant personal alignment.

PayPal’s partnership with Mastercard’s Crypto program and its PYUSD stablecoin provide extra growth potential that analysts haven’t yet factored into their valuation models.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.