The market value has evaporated nearly 90% from its peak, and tonight's financial report will test whether the "long-term value" holds up.

Written by: Zennon Kapron, Forbes

Translated by: Saoirse, Foresight News

Refusing the acquisition by Stripe is just the simplest step, while the subsequent transformation will face long and tough challenges. PayPal rejected the $53 billion privatization offer, establishing a quantifiable benchmark for this decision: the long-term value generated by the company's autonomous operations must exceed the total cash amount offered by Stripe and Advent. And tonight (July 28), is the day for PayPal to undergo its first round of market validation.

Reuters reported on July 15 that Stripe and Advent International made an acquisition offer of $60.50 per share, with the overall transaction size being around $53 billion, aiming to privatize PayPal. This offer represented a 28% premium over the closing price of the previous trading day before the acquisition news was disclosed; the acquirers secured a dedicated credit line of approximately $50 billion from banks. After the transaction closes, the two acquirers will split the equity, and reports indicate that there are no plans to break up PayPal. The PayPal board made a decisive refusal within days and officially announced the rejection on July 20. In this transaction, Goldman Sachs and Evercore provided advisory services to PayPal, with reports indicating that the board's expected reasonable offer is close to $70 per share.

A rejection of a $53 billion acquisition means that the board believes the current management can execute the company's strategy in a way that creates more than $53 billion in value for shareholders. However, this confidence must be supported by performance, as the root cause of PayPal's stock price dropping to $47.37 per share is its long-term unsatisfactory operating performance.

PayPal's stock price hit a peak of $305.88 on July 23, 2021, corresponding to a market value of nearly $360 billion. However, when the acquisition offer was announced, PayPal's market value was only about $44 billion, shrinking nearly ninety percent from its peak; in contrast, the overall payment industry continues to grow in transaction volume.

The underlying logic of the acquirers willing to pay high prices

Stripe has never casually thrown out acquisition offers. By 2025, the company's total transaction processing volume reached $19 trillion, a year-on-year increase of 34%; in February 2026, during an equity subscription transaction for internal employees, Stripe was valued at $159 billion. The company spent $1.1 billion to acquire the stablecoin infrastructure company Bridge while incubating the payment blockchain project Tempo. Tempo secured a total of $500 million in financing from Thrive and Greenoaks, with a post-investment valuation of $5 billion. Since 2008, Advent International has invested over $7.8 billion in 18 payment and fintech companies, including Worldpay, Nets, and Nexi. The institution's industry research reports illustrate how Worldpay and Vantiv grew into industry leaders after splitting from their parent company, providing evidence that payment segments can become global leaders after separating, which perfectly aligns with the case of PayPal.

From various public reports, the core demands of the acquirers can be clearly understood: the PYUSD stablecoin covering 70 global markets, PayPal's brand cash register system, Venmo, and the unique user data advantage that PayPal holds in the intelligent commercial space, according to KBW analyst Sanjay Sakhrani. The acquirers are willing to offer a high price because they see PayPal as a foundational infrastructure for a new wave of payments. However, the PayPal board holds a different view, believing that this value can be fully realized through the company’s efforts. Yet, the business results over the past five years have made it difficult for the market to easily accept this reasoning.

Five years of strategic flip-flopping, leading to a continued loss of market confidence

Looking back to October 2021, news emerged that PayPal planned to acquire Pinterest for about $70 per share, with a total transaction size of about $39 billion. After the news broke, PayPal's stock price dropped, and when PayPal ultimately abandoned the acquisition, the pre-market stock price surged over 6%. The market's joy at the shelving of this major strategic move indicates that investors were not optimistic about this acquisition layout.

In February 2022, management's strategy again fell short. The company had previously set a long-term goal of 750 million active accounts but announced a year later that it would abandon this target; it also disclosed the presence of 4.5 million fake accounts on the platform and lowered its full-year revenue expectations. After multiple adverse impacts, PayPal's stock price plummeted 25% in a single day, creating a new 52-week low. The grand vision of creating a one-stop super app also faded away alongside the user growth targets.

In August 2022, activist investment firm Elliott Management entered the scene, spending $2 billion to acquire PayPal shares and proposing a value-remodeling plan. Yet within a mere year, this firm completely liquidated its holdings. Activist investors typically do not easily abandon value-creating proposals, and a total exit is itself a negative signal.

Alex Chriss became CEO in September 2023, claiming that his first innovation launch event would astound the industry. The market was filled with expectations, pushing the stock price up over 10% in just a week; however, the launch only introduced a few unremarkable products like Fastlane checkout, cashback, and intelligent billing, leading to a stock price decline of about 4% on the launch day. By February 3, 2026, the growth rate for the brand cash register business fell to 1%, and the board dismissed Alex Chriss. Chairman David Dorman explained this by saying, "The speed of transformation and the efficiency of execution did not meet the board's expectations." Enrique Lores, formerly with HP, took over as CEO, marking the appointment of PayPal's third permanent CEO within three years, during which time CFO Jamie Miller had temporarily taken over the company's operations.

In 2019, PayPal spent $4 billion to acquire the cashback plugin Honey, a deal that also warrants review. At that time, the company positioned Honey as an engine for e-commerce growth and data mining, but in December 2024, numerous reports indicated that Honey had privately altered affiliate promotion codes, intercepting commissions meant for content creators. In January 2026, the collective lawsuit plaintiffs submitted a revised complaint. Regardless of how the court eventually rules, this acquisition has never fulfilled the promised revenue value.

The acquirers have seen through PayPal's long-standing issues: frequent strategy announcements, repeated reversals, and continuous changes in management. Over the past five years, PayPal has never lacked quality assets; what it lacks is a long-term strategy that can be stably executed and run continuously for over two years.

Analyzing operational data: Weak growth in core business, dependence on low-margin operations for profitability

The latest operating data shows that PayPal's core quality business is experiencing weak growth and continuing value erosion, with most new performance coming from low-margin segments. In 2025, the company's total revenue was $33.2 billion, up 4% year-on-year, with an overall transaction processing volume of $17.9 trillion. Excluding the impact of exchange rate fluctuations, the core business brand cash register, which PayPal relies on, saw only a 1% growth rate in Q4 2025, followed by a 2% growth rate in Q1 2026; the unbranded payment business Braintree achieved an 11% growth rate, but this business has weak bargaining power toward large enterprises, and partners continuously compress profit margins year after year.

User share data highlights a survival crisis. Bernstein's calculations show that PayPal's market share in the U.S. digital wallet market has dropped from 90% in 2017 to 50% in 2023, now down to about 40%; Apple Pay's market share is close to 20%, and Shop Pay’s annual compound growth rate is around 30%. As of the end of March 2026, PayPal's total active accounts stood at 439 million, netting only an increase of 4 million compared to December 2022. Over four years, while millions of new consumers have entered global e-commerce, PayPal's user growth has nearly stagnated.

The guidance given by management for the 2026 performance is quite cautious: transaction-related profits are set to decline slightly, and adjusted net profits are very likely to also see a slight dip, at best remaining flat. Over the past twelve months, PayPal has spent a total of $6 billion on stock buybacks, with a repurchase volume of about 100 million shares. Motley Fool analysis suggests that at the current repurchase pace, PayPal may complete the buyback of all circulating shares by 2032. A company's large-scale stock buybacks often indicate that management is unable to find investment directions with higher returns. The market has responded with a corresponding pricing: the current stock price corresponds to a forward P/E ratio of only 8.5 times.

The board's determination to resist the acquisition: confidence and risks

The logic supporting optimism for PayPal genuinely exists, which is why the acquirers are willing to offer a premium and why the board dares to stick to a higher price, even if this persistence may ultimately be proven to be a misjudgment. Venmo is projected to generate $1.7 billion in revenue in 2025, a year-on-year increase of about 20%, with 67 million monthly active users and a 50% increase in debit card transaction volume; in October 2025, PayPal partnered with OpenAI, integrating ChatGPT's one-click payment feature into the PayPal wallet, seizing a first-mover advantage in the intelligent payment space; the market value of the PYUSD stablecoin reached a peak of $4 billion in March 2026.

However, these ace assets harbor risks. The market value of PYUSD has shrunk by one-third since its peak in March, down to about $2.8 billion, while the stablecoin infrastructure that the acquirers are planning is still steadily expanding; it took PayPal ten years after Venmo’s explosive rise to finally find a mature commercialization path; the ChatGPT payment collaboration lacks exclusive barriers, as OpenAI has established partnerships with most payment service providers.

Investor Michael Burry, who holds a significant stake in PayPal, believes that $60.5 is just the starting price for the acquisition, with the company's reasonable valuation approaching $100 per share. Cantor Fitzgerald, using the sum-of-the-parts valuation method, estimates PayPal's reasonable valuation at about $70 per share, aligning with the board's psychological price level. These valuation judgments might hold, but there remains a core question that is always unanswered: how can a company, that has frequently stumbled and lacks execution capabilities over the past five years, raise its current price of $47 per share to $100? Quality assets that cannot be monetized ultimately belong to those who can realize commercialization; in recent years, the acquirers’ execution capabilities far exceed those of PayPal.

Tonight, the decisive financial report test to determine the way forward

PayPal will release its second-quarter financial report tonight (the financial report is expected to be published between 6:00 PM and 7:00 PM Beijing time on July 28, with the financial report conference call starting at 8:00 PM), which will serve as a public evaluation of the market's decision to "reject the acquisition". Enrique Lores must deliver clear and impressive results: the brand cash register business must return to accelerated growth, Venmo must maintain stable expansion, and there must be a clear explanation of how PYUSD and intelligent payment collaborations will generate revenue. Not only does this quarter need to meet the standards, but every quarter in the coming years must also deliver growth; only in this way can it be proven that the long-term value of independent operations exceeds $53 billion. Enrique Lores officially took office in March of this year, having been in charge of the company for only five months.

The first-quarter financial report has already exposed the current trust dilemma: revenue was $8.4 billion, a year-on-year increase of 7%, exceeding market expectations, yet the stock price continued to weaken, with the root cause being management's performance guidance still being conservative. This is the vicious cycle brought about by a lack of credibility: even if the financial report data exceeds expectations, the market will apply significant discounts; investors will directly choose to ignore management's strategic commitments. Valuations remain under pressure until the acquirers offer real cash to break the deadlock, as Stripe and Advent have done. However, the board chose to reject this, betting on the short-term new strategy built by the new CEO, while shareholders have yet to see a complete and viable execution plan.

Stripe and Advent can afford to wait patiently. The entire financing plan has already been prepared, and the logic behind the acquisition will not diminish over time; as long as PayPal's performance continues to lag in the subsequent quarters, shareholders will increasingly lean toward accepting the acquisition. Over the past five years, PayPal has fully demonstrated that having quality assets and transforming those assets into stable, continuous revenue are two vastly different capabilities. Now, the board is betting the equity worth $53 billion for all shareholders on the hope that PayPal will finally acquire the ability to monetize its assets. The only visible chip at present is this CEO, who has just completed 20 weeks in office, and a transformation plan that has not yet been fully disclosed to shareholders. Starting from July 28, the market will verify each quarter whether this confidence holds true.