PayPal’s Size Doesn’t Offset Weaker Growth Quality
PayPal boasts massive size, but that scale no longer masks its weaker growth quality. PayPal ended 2025 with 439 million active accounts and processed $1.79 trillion in payments, highlighting the scale of its global network. Revenue rose 4%, while transaction-margin dollars (net revenue left after transaction expenses and transaction and credit losses) increased 6%. Most impressively, adjusted earnings per share (EPS) grew 14%.
However, the main caveat was branded checkout — PayPal’s familiar payment option on merchant websites and its most distinctive product. Branded-checkout total payment volume (TPV) grew just 1% on a currency-neutral basis in Q4 2025 and 2% in Q1 2026, suggesting PayPal’s core business remains slow.
Buybacks are also boosting EPS, even though what investors really need is durable organic growth. Q1 non-GAAP net income fell 7%, but this was effectively masked by an 8% reduction in diluted shares. The net effect was that earnings per share rose 1%. I would like to see management demonstrate enough product innovation and momentum before adding the stock as a long-term position to my portfolio. I’m staying neutral until then.
