Could Buying PayPal Stock Today Set You Up for Life?

Justin Pope, The Motley Fool

Sun, Apr 13, 2025, 12:12 PM 5 min read

Financial technology, or fintech, is about innovating and finding new ways to move money between people and businesses. PayPal (NASDAQ: PYPL) is the original fintech stock. It's been around since 2000, and it survived the infamous dot-com bubble. It's known today for its namesake digital and mobile payments network and Venmo, its peer-to-peer payments app.

Unfortunately, PayPal isn't hot anymore. The business went stale, and the stock is down almost 80% from its high in 2021. PayPal's new CEO, Alex Chriss, hopes to teach an old company some new tricks that will revive the brand and stock.

Can buying PayPal today set you up for life, or has this fintech stock seen its best days?

The answer may surprise you.

It's not flashy, but PayPal is still more prominent in the fintech space than you might guess. The company's payments ecosystem spans approximately 434 million active accounts across 200 markets, and it processed $1.68 trillion in payment volume last year. Establishing a global payments network is remarkably difficult in the face of competition and regulatory hurdles.

Did PayPal's business grow stale? I'd say so. Competition in its payment processing business has steadily eroded its margins. The company's gross margins have slipped from approximately 64% a decade ago to under 46% early last year. Additionally, active accounts plateaued after 2021.

These are two nightmare developments! Yet, PayPal has continued to grow its top and bottom lines.

Not many companies can stumble like this and grow earnings per share four-fold in 10 years. If the core business is this good, what will happen as Chriss executes his plan to build new products and features on top of it?

At its recent investor event, PayPal emphasized its goal of becoming a commerce platform. It hopes to leverage its payment technology and user data to drive engagement for its users and merchants. In other words, PayPal wants its platform to encourage people to buy, sell, pay, and borrow more, which is a win-win for all.

This will all take time, but the company has a high ceiling if it executes well. PayPal's network has already helped it compete in emerging vertical markets, like peer-to-peer payments, BNPL (Buy Now, Pay Later), and business loans and services. It launched a new digital advertising segment only months ago.

PayPal guided for 6% to 10% earnings growth in 2025, with goals to achieve low-teens growth by 2027 and at least 20% annualized earnings growth after that. It's an aggressive goal, but again, PayPal's earnings roughly quadrupled over the past decade despite collapsing margins and little unity among the company's moving parts.