As PayPal prepares to report its first-quarter results on May 5, the company finds itself walking a tightrope. On one side, a series of new high-profile partnerships aims to reignite growth; on the other, institutional selling, legal challenges, and skeptical analysts create persistent headwinds.
The upcoming earnings report is a critical test. Wall Street anticipates earnings per share of $1.27 for Q1 2026, which would mark a decline of roughly 4.5% from the year-ago quarter. This follows a disappointing fourth quarter where adjusted EPS of $1.23 missed the $1.29 consensus. Revenue for that period reached $8.68 billion, also falling short of expectations. The aftermath of that report was severe, triggering a single-day stock plunge of over 20% to $41.70.
That February sell-off has sparked legal repercussions. A key deadline passed on April 20 for lead plaintiffs to join a securities fraud lawsuit targeting shareholders who held PayPal stock between February 2024 and February 2026. The suit alleges management misled investors about the core business’s health. This is not PayPal’s only legal concern. Two additional active class actions are underway: one concerning the Honey browser extension accused of siphoning commissions from creators, and another alleging PayPal used illegal agreements to block merchants from offering cheaper checkout alternatives.
Against this legal backdrop, significant institutional money has been moving away from the stock. AE Wealth Management slashed its PayPal position by 46.8% in the fourth quarter, selling approximately 26,000 shares. They were not alone, as company insiders recently sold a combined total of nearly 88,000 shares worth about $3.8 million. Transactions included over 37,000 shares sold by Suzan Kereere and more than 2,200 by Chief Accounting Officer Chris Natali.
Management is countering with strategic partnerships designed to expand its user base and relevance. In a notable marketing coup, the NFL has named PayPal its official peer-to-peer payment partner for multiple years, granting exclusive promotional rights within the NFL ecosystem. This sports-focused strategy mirrors a recent deal with Liverpool FC. Beyond sports, PayPal has integrated its payment links directly into the design platform Canva, which boasts 265 million monthly users. A separate partnership with Meta allows Facebook users to make purchases with a tap without leaving the app.
Should investors sell immediately? Or is it worth buying PayPal?
The urgency behind these moves is clear. PayPal’s U.S. user base is projected to grow by less than 1% in 2026 to about 92 million. Over the same period, Apple Pay is expected to reach 90.5 million U.S. users, rapidly closing the gap.
Despite the challenges, the stock has staged a partial recovery from its February low of $32.93, climbing over 32% since then. It currently trades around €43.50, having decisively moved above its 50-day average of €38.78. Even so, it remains approximately 35% below its 52-week high of €67.50 set last July and is down about 12% year-to-date.
Analyst sentiment remains cautious. Of 43 analysts covering the stock, 29 maintain a “Hold” rating. The average price target sits around $50.67. For the full year 2026, the EPS consensus is $5.31, indicating no growth from the projected 2025 level. The company plans to generate over $6 billion in free cash flow this year, with share repurchases of a similar magnitude planned.
Investors awaiting the May 5 report will be looking for signs that new initiatives can offset the legal overhang and user growth pressures. The company continues to pay a quarterly dividend of $0.14 per share, a modest return for shareholders seeking a clearer path forward.
Ad
PayPal Stock: Buy or Sell?! New PayPal Analysis from April 22 delivers the answer:
The latest PayPal figures speak for themselves: Urgent action needed for PayPal investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from April 22.
PayPal: Buy or sell? Read more here...
