The payments giant is sprinting into new territory—connected TV advertising, a global stablecoin push, and an NFL tie-up—but the stock is still nursing a 14% year-to-date loss. On May 5, when PayPal reports first-quarter results, investors will demand proof that these initiatives can offset the margin erosion eating into its core business.
A Fresh Revenue Stream Takes Flight
Curated Ads, PayPal’s data-driven advertising network, went live on April 22. The system links ad impressions directly to verified purchase data, bypassing the cookies and estimation models that plague digital advertising. With roughly 25 billion annual transactions at its disposal, PayPal is betting it can solve the industry’s waste problem—trade groups estimate that more than a third of programmatic ad spend currently misses its target.
Warner Bros. Discovery and Tubi have already signed on as launch partners. The move marks PayPal’s entry into the connected TV market, a fast-growing segment where advertisers crave measurable returns.
Meanwhile, the company’s stablecoin PYUSD has expanded to 70 countries, with its market capitalization quadrupling over the past year to surpass $4 billion. And a new multiyear partnership with the National Football League makes PayPal and its Venmo subsidiary the league’s official payment processor, allowing fans to send and share money during games worldwide.
Venmo Emerges as a Bright Spot
While the traditional checkout business—still responsible for more than half of corporate profits—struggles with macro headwinds and slower merchant adoption, Venmo is delivering double-digit growth. In mid-April, PayPal expanded Venmo’s “Stash” rewards program, offering up to 5% cashback at select brands. Merchants including Sephora, Ulta, and Taco Bell now accept the payment method, boosting both transaction volume and monthly active accounts.
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But Venmo’s momentum alone may not be enough. The core PayPal button business is under pressure from competitors like Apple Pay and Block, and the company needs to prove that its new features can retain users within its own ecosystem.
The Numbers That Matter
For the first quarter, analysts expect revenue of roughly $8.05 billion, with earnings per share sliding to $1.27 from $1.33 a year earlier. Management has guided for a slight revenue increase on a currency-adjusted basis. The Q1 report follows a brutal February selloff, when the stock plunged 20% after disappointing fourth-quarter results.
Operating costs are rising, and a shareholder class action alleges that executives inflated revenue forecasts while downplaying macroeconomic risks. The company plans to generate over $6 billion in free cash flow for the full year 2026, with a similar amount earmarked for share buybacks—a program that has helped support the stock at current levels.
Valuation and the Road Ahead
Trading at roughly 9 times expected earnings, PayPal carries a steep discount to the industry average of about 17. The stock closed Friday at €42.72, up roughly 10% over the past month but still well below its 200-day moving average near €51. CEO Enrique Lores faces his first major test on May 5, needing to convince investors that the costly investments in advertising, crypto, and Venmo can soon compensate for the margin compression in the legacy business.
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