PayPal Rejected a $53 Billion Takeover Bid: Is the Stock Undervalued?

Key Points

• PayPal's board rejected a joint $53.4 billion takeover bid from Stripe and Advent International, though shares have kept climbing above pre-bid levels.
• The acquisition offer reportedly aimed to secure PayPal's stablecoin, PYUSD, whose reach is growing after Visa added it to its settlement platform.
• Despite a consensus Hold rating from analysts, PayPal posted accelerating revenue growth, rebounding free cash flow, and repeated earnings beats under new CEO Enrique Lores.

Since its founding in December 1998, PayPal NASDAQ: PYPL has grown alongside e-commerce into a financial services giant. Today, the company’s market cap exceeds $50 billion. But along the way, the stock has not been kind to investors.

Following its return to public trading in July 2015 after being spun off from eBay NASDAQ: EBAY, PayPal surged to its all-time high of $308.53 per share in July 2021. But it has been a difficult ride for shareholders, with PYPL down nearly 82% since then.

But last week, long-term holders were treated to an unexpected catalyst: Stripe and private equity firm Advent International proposed a joint $53.4 billion acquisition of PayPal. Shares rose up as much as 19% in pre-market trading on July 15, finishing the day up nearly 16%.

In the days that followed, PayPal’s board declined the offer, stating that the bid was too low. Nonetheless, a deal could still materialize.

In the meantime, shares have continued to climb above their pre-bid level. Here’s what investors need to know about the digital payment platform’s future, and whether or not the stock’s recent turnaround can be sustained.

Details of the $53 Billion Bid PayPal Passed On

Seeing a potentially mispriced company, the offer was priced at $60.50 per share—about 6.5% higher than the stock's July 20 closing price, and around 28% above its July 14 pre-announceemnt close.

Had the bid been accepted, at $53.4 billion, it would have been the largest fintech acquisition in history. Stripe and Advent reportedly planned to hold equal ownership stakes in PayPal rather than divide the company’s assets.

The move makes sense for privately-held Stripe, a financial infrastructure platform that provides global payment processing, subscription management, and fraud prevention services to businesses.

But that offer was not aimed at absorbing PayPal’s 439 million active consumer and merchant accounts around the world. According to Tech Times, the bid was aimed at securing PayPal’s “consumer-facing stablecoin distribution network and the peer-to-peer trust relationship those accounts represent.

PayPal’s Stablecoin Is the Ultimate Prize

Launched on Aug. 7, 2023, PayPal’s native stablecoin—PayPal USD (PYUSD)—represents the next chapter in the company’s payment facilitation playbook.

Built on the Ethereum (ETH) and Solana (SOL) blockchains ,PYUSD is designed to remain worth $1 and is backed by cash and short-term U.S. government debt. Eligible PayPal users can currently earn a variable 4% annual reward by holding it in their accounts.

But more importantly, Visa NYSE: V added PYUSD to its stablecoin settlement platform, allowing participating issuers and acquirers to use the token for certain settlement transactions across Visa’s network. The integration could expand PYUSD’s role in cross-border and on-chain payments as Visa builds out its stablecoin infrastructure.

According to Visa’s 2025 annual report, the company reported 4.7 billion Visa-branded cards with total volume of $16.7 trillion last year.

Meanwhile, industry consultancy firm Grand View Research forecasts the global stablecoins segment of the decentralized finance market to grow to nearly $183 billion by 2033 from $3.3 billion in 2025—good for an almost comical compound annual growth rate of 69%.

As part of its expanded payment settlement rails, Visa’s decision to embrace the PYUSD stablecoin to allow partners to settle fiat currency-backed transactions directly on-chain is poised to be a massive windfall for PayPal.

At the same time, PayPal continues to expand PYUSD’s utility as a low-cost, near-instant payment and transfer mechanism within its digital wallet ecosystem on Venmo and PayPal.

Together with the $60.50 offering, this suggests that at current prices, shares of the San Jose, California-based firm could be dramatically undervalued.

Is PayPal Underpriced?

For now, Wall Street has yet to price in the stablecoin story.

Based on the 46 analysts who cover the stock, PayPal carries a consensus Hold rating and an average 12-month price target implies nearly 2% downside from current prices.

While that may be discounting the underlying price drivers PayPal is set to enjoy, it also overlooks solid fundamentals and sound management.

In Q1, revenue growth stood at 7.21%—a dramatic year-over-year increase from 1.2% in Q1 2025.

Similarly, after four consecutive quarters of free cash flow (FCF) contraction, PayPal posted back-to-back quarters of FCF in Q4 2025 and Q1 at nearly 354% and 155%, respectively.

Earnings per share (EPS) offers another clue. Despite their struggles, PayPal has beat on earnings in nine of the last 11 quarters, including seven of the last eight. In Q1, the company reported EPS of $1.34, topping the consensus estimate of $1.27, and with a trailing price-to-earnings ratio of 10.66, PayPal’s earnings are expected to grow 8.27% in the next year.

In the company's Q1 earnings call, PayPal’s new CEO Enrique Lores, who officially took on that role on March 1, reaffirmed the company’s focus on three lines of business: Checkout/PayPal, Consumer Financial Services/Venmo, and Payment Services/Crypto—the latter of which underscores the significance of PYUSD.

Management also expects at least $1.5 billion of gross run-rate savings over the next two to three years as broad AI and automation adoption drives down operating costs. Ultimately, these factors should continue to fuel a long-awaited rebound for the company, which next reports earnings on July 28.

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