The investment case for PayPal is currently defined by a stark divide. On one side, prominent Wall Street analysts express significant doubts. On the other, institutional money managers are seizing the opportunity to build substantial positions. This clash of perspectives centers on whether fundamental strengths and valuation can outweigh concerns over competitive pressures and execution speed.
Strong Fundamentals Provide a Foundation
Contrasting the negative sentiment are PayPal’s recent operational results, which delivered a double beat against Wall Street forecasts. The company’s third-quarter 2025 report revealed solid performance:
- Earnings Per Share (EPS): $1.34, surpassing the consensus estimate of $1.20.
- Revenue: $8.42 billion, exceeding expectations of $8.21 billion.
- Growth: Year-over-year revenue increased by 7.3%.
Furthermore, management provided clear full-year guidance, projecting 2025 EPS in the range of $5.35 to $5.39. Based on this outlook, the stock trades at a forward price-to-earnings multiple of approximately 11 to 12. For value-focused investors, this valuation appears modest relative to many technology sector peers, suggesting potential downside protection.
A Major Institutional Vote of Confidence
The most compelling counter-narrative to prevailing skepticism comes from institutional buying activity. Secure Asset Management LLC provided a significant catalyst at the start of the trading week, disclosing a major expansion of its PayPal stake.
The asset manager’s latest filings, released over the weekend, show it increased its holdings by 57.1% during the third quarter. This move involved acquiring an additional 20,726 shares, bringing its total position to 57,018 shares with a market value of roughly $3.80 million. Such aggressive accumulation typically signals a fund manager’s belief that the stock is oversold relative to its intrinsic value and future cash flow potential, representing a clear divergence from the caution exhibited by many retail investors.
Persistent Analyst Concerns Create Headwinds
Despite the fundamental strength and institutional buying, analyst pressure remains palpable. A sharp downgrade from Morgan Stanley late last week continues to weigh on sentiment. The investment bank reduced its rating on PayPal to “Underweight” and slashed its price target from $74.00 to $51.00.
Should investors sell immediately? Or is it worth buying PayPal?
Morgan Stanley’s pessimistic stance is rooted in three primary concerns:
- Execution Risks: Perceived slow progress in enhancing and expanding the “branded checkout” experience.
- Competitive Threats: Increasing integration complexity is expected to cede market share to more agile rivals.
- Valuation Adjustment: The new target price implies significant downside from previous trading levels.
This assessment creates notable market tension. While Morgan Stanley sees fair value at just $51, the average analyst price target sits near $78.97. This wide discrepancy fuels uncertainty and can amplify share price volatility.
Technical and Sentiment Indicators Reflect the Tension
The current market mood is captured by sentiment gauges like the “Fear & Greed Index,” which registers at 39, indicating a prevailing sense of fear surrounding the stock. From a chart perspective, the price trades below its key moving averages, confirming a intact medium-term downtrend.
The longer-term performance underscores this weakness. Since the start of the year, PayPal shares have declined approximately 39%. Currently trading around €51, the stock hovers just above its recent 52-week low, while remaining nearly 43% below its annual high.
Conclusion: A Defining Conflict for the Quarter
The battle lines are clearly drawn. One camp, led by high-profile bears like Morgan Stanley, focuses intently on competitive encroachment and operational risks. The opposing side, including investors like Secure Asset Management, views the steep price decline as a chance to build a major position, backed by strong earnings, clear guidance, and a sector-relative discount.
The resolution of this conflict in coming quarters will likely hinge on PayPal’s ability to demonstrably advance its product strategy, particularly in the checkout domain, and to methodically dismantle the current wall of skepticism with continued delivery of solid financial reports.
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