PayPal (PYPL) has experienced a significant decline, with its stock dropping nearly 40% over the past three years due to stalled growth in accounts and sales. The company faced a major setback in 2018 when eBay switched to Adyen as its preferred payment provider, which hampered revenue growth. Although PayPal saw some pandemic-related boosts, it struggled to maintain that momentum as competition intensified and its reliance on lower-margin platforms like Braintree and Venmo increased.
Despite these challenges, analysts predict a modest recovery for PayPal, forecasting revenue and EPS growth at CAGRs of 4% and 6%, respectively, from 2025 to 2028. This growth is expected to be driven by deeper partnerships, new product offerings, and an expanded ecosystem that includes crypto trading and high-yield savings accounts. However, the company’s transaction take rate has declined significantly, raising concerns about its profitability.
For market professionals, the key takeaway is that while PayPal may not be a turnaround play just yet, its potential for steady gains over the next few years could present an opportunity if it stabilizes its margins and take rates.
Source: fool.com