TLDR
- PayPal announces Q4 2025 earnings February 3 with consensus estimates of $1.29 per share on $8.77 billion revenue
- Branded checkout growth expected to decelerate to 2-3% in Q4 from 5% in Q3 due to competitive pressure
- Stock down 22% over three months, trading at $52.69 near 52-week lows despite attractive 9.07X forward P/E valuation
- AI commerce investments won’t deliver returns until 2027 while operating expenses rise at same pace as transaction margins
- Analysts maintain neutral stance with 27 hold ratings versus 13 buys and 5 sells among 45 analysts covering the stock
PayPal reports fourth-quarter 2025 results on February 3 before the market opens. The digital payments company faces questions about its ability to compete in an increasingly crowded space.
PayPal Holdings, Inc., PYPL
Analysts expect earnings of $1.29 per share on revenue of $8.77 billion. That represents 4.8% revenue growth compared to the same quarter last year.
The stock has struggled recently. Shares fell 22% over the past three months while the S&P 500 gained 2.3%.
PayPal now trades at $52.69, barely above its 52-week low of $52.06. The stock carries a forward P/E ratio of 9.07 compared to the industry average of 19.14.
Core Business Loses Steam
The company’s branded checkout service is slowing down. This digital wallet lets customers pay across different merchant sites.
Growth in this segment is projected to hit just 2-3% in Q4. That’s a sharp drop from 5% growth in the previous quarter.
Apple Pay and Stripe continue grabbing market share. Softer e-commerce trends aren’t helping either.
CFO Jamie Miller previously warned that branded checkout would grow a couple of points lower in Q4. The numbers are bearing that out.
Total Payment Volume should reach $468.3 billion, up 7% year-over-year. Transaction revenues are expected at $7.93 billion, growing 4.5%.
Active accounts are projected to hit 440.3 million versus 434 million last year. But payment transactions may dip slightly to 6.607 billion from 6.619 billion.
Wall Street has responded with caution. Rothschild Redburn downgraded the stock to sell with a $50 target. Daiwa Securities cut to hold with a $61 target.
Among 45 analysts, only 13 rate PayPal a buy. Twenty-seven assign hold ratings and five recommend selling.
AI Investments Create Waiting Game
PayPal is betting big on AI-powered agentic commerce. These are shopping agents that assist with purchases.
The company is also upgrading checkout integrations with merchants. Progress has been slow though.
After 15 months, only 25% of merchants have adopted the new checkout experience. Just half of those use the most optimized version.
These investments won’t pay off until fiscal 2027 at the earliest. That creates a gap between spending today and returns tomorrow.
Transaction margin dollar growth tells the story. The metric is expected to slow to 4% in fiscal 2026 from 6% in fiscal 2025.
Operating expenses are rising at the same pace as transaction margins now. Historically, they grew at half that rate.
PayPal beat estimates last quarter with $1.34 per share versus $1.21 expected. Revenue hit $8.42 billion against $8.22 billion projected.
Despite the beat, shares dropped 19% after the report. Investors focused on forward guidance rather than past performance.
For full-year 2025, the company guided for earnings between $5.35 and $5.39 per share. That represents 15-16% growth.
The consensus estimate sits at $5.36 per share. Revenue is projected at $33.27 billion, up 4.6% year-over-year.
BTIG maintained a neutral rating ahead of earnings. The firm expects adjusted EPS growth to slow to 8% in fiscal 2026 from 15% in fiscal 2025.
PayPal has beaten consensus estimates in each of the past four quarters by an average of 10.3%. The company’s cheap valuation hasn’t attracted buyers yet as competitive pressures mount.
The post PayPal (PYPL) Stock: Q4 Earnings Tuesday Face Pressure From Slowing Checkout Growth appeared first on Blockonomi.