PayPal stock was under heavy pressure after Stripe and Advent International said they were dropping their bid to buy the payments company. The proposed deal would give PayPal a valuation of around $53 billion, with an offer of $60.50 a share. Shares of PayPal plunged after the takeover catalyst was gone.
Why PayPal Stock Could Bounce
Some analysts, however, believe PayPal stock could eventually bounce back if the company is able to successfully execute its turnaround plan, despite an immediate selloff. Barron’s cited the strength of PayPal’s large payments business and Venmo, while noting that the company still processes around $2 trillion in payment volume each year.
The end of the talks over a takeover also shifts investor focus back to PayPal’s underlying business, away from speculation about a sale.
PayPal’s Turnaround Plan Grows More Important
PayPal is being restructured by CEO Enrique Lores into three businesses: Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services & Crypto. The company says the simplified structure should improve accountability, streamline operations and support long-term growth.
As part of its transformation strategy, PayPal has also targeted gross run-rate savings of at least $1.5 billion over the next two to three years. That cost reduction program could be an important contributor to improved profitability if management can pull it off successfully.
Strong Q2 Results Give Investors Something To Watch
In July, PayPal reported second-quarter results that beat expectations, and this could be another potential support for the stock. Revenue was $8.68 billion, and adjusted earnings per share were $1.38, beating Wall Street’s expectations of $1.28.
The company also raised its full-year 2026 adjusted earnings guidance to $5.38 per share.
“The results show that PayPal still has plenty of financial firepower to invest in technology, upgrade its payment products and follow through on its restructuring plan.”
Limited upside for analysts
Analysts are split on their opinions so a rebound for PayPal shares is anything but guaranteed. TipRanks data showed multiple analysts keeping their Hold ratings, with Truist and KBW raising their price targets to $62 and $70 respectively.
Some analysts believe there is room for recovery even without a takeover. Macquarie analyst Paul Golding, also cited by Barron’s, has a $62 price target.
The risk of competition remains
There’s a lot of work to be done at PayPal. Apple Pay, Google Pay and other digital-payment services are still fighting for consumers and merchants, while PayPal has been hard-pressed to return to the growth rates it saw during the pandemic.
So the company needs to show real improvements from its restructuring, technology upgrades and cost cuts. If those efforts don’t spur growth, the stock could remain under pressure once the takeover speculation fades.
also read: Mortgage Rates Hit 3-Week High as Homebuyer Demand Weakens Further
