Valued at a market cap of $47 billion, PayPal has grossly underperformed the broader markets over the last five years. Today, the fintech giant trades 82% below all-time highs, while the S&P 500 index is close to record levels.
The ongoing drawdown has meant that PYPL stock trades at 10x forward earnings, below the 65x multiple in early 2021, given data from TIKR.
On Oct. 27, CEO Enrique Lores and Chief Financial and Operating Officer Jamie Miller gave investors their best evidence yet that a turnaround is taking shape.
The question is whether that evidence is enough to lift the stock in 2027.
I have my doubts about the timing. Let me explain why.
Why PayPal stock lost its shine
PayPal built its name on online checkout. Shoppers trusted it with their payment details, which turned the PayPal button into a habit that powered the whole business.
Also Read: PayPal just lost its $53 billion safety net
Lores said on the company’s Q3 earnings call that branded checkout volume has grown just 1% to 2% for four quarters in a row. Miller added that the removal of the EU de minimis tax exemption created about 70 basis points of headwind.
When a flagship product stalls, investors start to doubt everything built around it.
So how does PayPal restart growth? Lores’s plan is to stop leaning on checkout alone. He said the company now runs as three businesses with clearer accountability.
He also said financial services already make up more than 20% of transaction margin dollars in 2026, and it’s growing at double-digit rates.
Q3 shows early progress
PayPal managed to beat its own estimates in Q3 of 2026. Miller said transaction margin dollars came in above expectations, while operating expenses landed below forecast, helping drive earnings growth.
Here are the numbers, according to PayPal’s earnings call:
Transaction margin dollars rose about 2%, or 3% excluding interest on customer balances.
Non-GAAP earnings per share (EPS) grew 8% to $1.45, above guidance.
Adjusted free cash flow came in at $2 billion.
PayPal bought back $1.5 billion of stock, bringing the trailing 12 months total to $6 billion.
Management then raised its full-year outlook.
It now expects transaction margin dollars of about $15.7 billion and non-GAAP EPS of about $5.60. Adjusted free cash flow is projected to reach $6.5 billion.
Venmo and Pay Later carry the load
Checkout still drives most of PayPal’s business, but it is not where the growth is.
Venmo is leading the way, with volume growing at a double-digit pace for eight straight quarters, according to Miller.
The Venmo debit card reached 6.7 million monthly active accounts, up more than 55%.
Pay with Venmo grew 43%, and Buy Now, Pay Later grew 25%.
Braintree, PayPal’s payment processing arm, saw volume rise 10%.
Lores said only 23% of Venmo customers use any of its financial services today. He also said PayPal sees a four- to five-times opportunity to raise average revenue per account, or ARPA, when it benchmarks against peers.
Customers who use financial services generate two to five times higher ARPA than those who do not, he added, which could be a future growth driver.
Lores also said PayPal is working with Meta and other artificial intelligence (AI) companies to bring PayPal into agentic commerce, where AI agents shop for consumers.
Cost cuts fund the plan
Lores said PayPal has cut headcount by more than 2,000 and removed three layers of management across most areas.
The company is on track for at least $1.5 billion in gross run rate savings over two to three years.
More than $700 million of that should be in place by the end of Q4, while non-transaction operating expenses grew only 1% in Q3.
More Layoffs:
Disney cuts 300 jobs and major overhaul puts hundreds more at risk
Microsoft cuts hundreds more jobs as restructuring deepens
Oracle layoffs top 2,500 workers as AI spending surges
Miller was careful, though. She said investors should not simply annualize that expense performance, because PayPal plans to reinvest in growth.
On how the company can grow without a checkout revival, Lores said:
“While we expect branded checkout TPV to improve, this algorithm does not require it to return fully to historical growth rates.”
Basically, PayPal is betting that Venmo, processing, and financial services can do the heavy lifting.
What 2027 really looks like
Here is where expectations need a reset. Management sees transaction margin dollars growing at a mid-single-digit rate over time.
For next year, Lores said PayPal is targeting non-GAAP EPS growth similar to 2026. He also said the company plans to invest more in both transaction margin dollars and operating expenses, while formal 2027 guidance comes in February.
Related: PayPal stock jumps as two unlikely buyers circle with billions
Miller said investments in branded checkout are underwritten to a two- to three-year horizon. For the largest merchants, it is closer to three years.
An analyst also asked about earlier talk of strategic alternatives. Lores said the board will look at any option objectively, but right now the best alternative is to execute the plan.
PayPal is wrestling with slowing growth in 2026Oscar Wong / Getty Images
My take on PayPal stock
After years of watching turnarounds, I see a familiar pattern. Cost cuts come first; growth isn’t guaranteed to follow.
PayPal is somewhere in the middle of its turnaround, and share buybacks, improving cash flow, and the raised guidance are positives.
Still, branded checkout is expected to grow by 1% to 2% through Q4. And 2027 earnings growth is meant to match this year, so management may struggle to deliver the kind of growth many investors want to see.
However, Wall Street estimates compiled by TIKR forecast PayPal to expand adjusted earnings per share from $5.46 in 2026 to $5.81 in 2027 and $9.11 in 2030.
If PYPL stock is priced at 10 times earnings, it could surge 65% within the next three years.
So can PayPal stock recover in 2027?
Next year looks more like a test of whether the turnaround is working than the year the stock bounces back.
I want to see three things before I place my bets on the fintech giant: better branded checkout in Europe, rising ARPA, and clear guidance in February.
More Stocks NewsAnalyst revamps SK Hynix stock price target after blockbuster earningsOracle has a spending question its new chip deals can’t answerCelestica sees 2027 sales nearly doubling to $40 billionWhat Jim Cramer is watching as Anthropic heads to Nasdaq