PayPal‘s shares fell once again following Wolfe Research lowering the payment behemoth to “Peer Perform.” The brokerage stated that the firm has made some strides in reducing expenses as well as enhancing platforms such as Venmo and Braintree, but the ultimate test is in its branded checkout business, PayPal’s growth narrative centerpiece.
Investors are closely following branded payment volumes, says Wolfe. This segment of the business is key as it affects both market share and long-term profitability. Today, PayPal has yet to demonstrate it can re-accelerate growth here before faith can be restored, Wolfe says.
Management has pencilled in around 5% expansion in branded volumes for the third quarter, assisted modestly by a decline in tariff pressures. But there are signs of weakness already. Wolfe noted softer consumer spending patterns in September and continued pressure in German retail, which is a major European market for PayPal.
Down the line, Wolfe does not believe that relief will come in the fourth quarter. Comparisons in the United States are more difficult this year, and the company’s new “modern checkout” experience is being introduced more slowly than anticipated. To date, it has not provided the lift in transaction growth as hoped.
Compounding the difficulty is increasing competition in buy-now-pay-later solutions. PayPal also faces the challenge of achieving greater usage of Pay with Venmo, which has so far grown significantly despite the popularity of the brand in the U.S.
What’s next for PayPal
Down the road, PayPal management is striving for 8–10% branded growth by 2027. However, Wolfe labelled the target a “show-me story,” cautioning that credibility only will be earned if the company can execute at least 7% growth consistently.
The stock action reflects investors’ uncertainty. Shares have fallen 19% this year, lagging both the S&P 500 and the sector group. To counter that, Wolfe reduced its fair value estimate for the stock to $70–$80 from $85, employing 11 times projected 2027 earnings as a reference point. The brokerage firm stated PayPal’s stock could remain trapped in sideways trading until the company demonstrates signs of its core engine gaining momentum again.
All that aside, however, Wolfe did identify some potential silver lining. Faster-than-anticipated branded volume growth, more robust capital returns, or having an impact with new products such as stablecoins or so-called “agentic commerce” might turn sentiment around. But these potential catalysts, the brokerage cautioned, will not be immediate.
