PayPal’s Continued Growth and Strong Partnerships Fuel Positive Outlook

Active Accounts and Transaction Growth Show Promising Trends

PayPal’s PYPL portfolio maintains strong bonds with merchants and consumers through its two-sided platform. This platform fosters direct financial relationships, leading to significant growth. Total active accounts rose 2% year-over-year to 434 million in 2024, driven by enhanced branded checkout options and popular features like Venmo.

Monthly active accounts also grew 2% year-over-year, reaching 223 million. Additionally, payment transactions increased by 5% year-over-year, totaling 26.33 million. Furthermore, the transactions per active account (TPA) edged up 3%, hitting 60.6 million. Excluding unbranded card processing, TPA saw a 4% increase year-over-year to 34.9 million.

The expansion of PayPal’s clientele bolstered total payment volume (TPV), which increased by 10% year-over-year, amounting to $1.68 trillion in 2024. Transaction margins in dollar terms also rose, increasing by 7% year-over-year. Notably, Buy-Now-Pay-Later TPV surged 21% year-over-year, reaching $33 billion. Adoption of Fastlane—which streamlines the checkout process—is expected to further enhance future volumes, especially given new partnerships with NBCUniversal, Roku, and StockX.

Strong Stock Performance Enhances Company Value

In the past year, PayPal shares have gained 35%, outperforming the Zacks Computer and Technology sector, which returned 25.6%.

PYPL Stock Performance Overview

Image Source: Zacks Investment Research

A robust portfolio is vital for PYPL’s growth trajectory. The introduction of Fastlane, designed for a one-click purchase experience, has been a significant addition. Since its launch in August, over 2,000 merchants have adopted Fastlane, enhancing the shopping experience and increasing conversion rates.

Partnerships with major firms like Adyen, Global Payments, and Pfizer are anticipated to attract additional merchants to Fastlane. Approximately 75% of Fastlane users are new or have not used PayPal recently, while 25% had never created a PayPal account before.

To further enhance merchant experiences, PayPal introduced FX-as-a-service for automated currency conversion, already in operation on Meta Platforms. Additionally, network tokens for automated billing are now active with merchants like Instacart, Mint Mobile, and Poshmark, thus improving transaction margins.

Launched in September, PayPal Everywhere is aiding the surge in debit card usage and expanding spending categories. During the fourth quarter of 2024, over 1.5 million new PayPal debit card users signed up, with debit card TPV nearly doubling. The most popular reward categories include gas, groceries, and dining.

Venmo also saw growth, with a 4% rise in users year-over-year, totaling over 64 million monthly active accounts in Q4 2024. The monetized Venmo accounts beyond P2P transactions increased by over 20%, thanks to the popularity of Venmo debit cards and the Pay with Venmo feature. Active Venmo debit card users grew by more than 30% during this period.

Broadening Partnerships Strengthen PayPal’s Future

PayPal’s expanding collaborations, including those with Fiserv, Adyen, Amazon, Global Payments, and Shopify, bolster its future prospects.

PayPal has recently become an additional processor for Shopify Payments in the U.S., integrating its branded checkout solutions into the platform to streamline operations for business owners. The partnership with Amazon now allows PayPal Checkout for small and medium-sized businesses offering “Buy with Prime.” Collaborations with Apple and Google bring the Venmo debit card further into consumer usage.

PayPal is recognized as a preferred payment method among advertisers and consumers within Meta Platforms’ ecosystem, while creators and developers are leveraging Hyperwallet. Braintree is also utilized by META for credit card processing.

Positive Earnings Estimates Indicate Growth

The Zacks Consensus Estimate for PayPal’s earnings in 2025 stands at $5.02 per share, reflecting a 2.44% increase over the past month and suggesting a 7.96% growth from 2024 earnings.

The revenue estimate for 2025 is projected at $33.01 billion, indicating a 3.81% increase from the year prior.

PayPal consistently outperformed the Zacks Consensus Estimate in the last four quarters, with an average surprise rate of 14.26%.

PayPal Holdings, Inc. Price and Consensus Chart

PayPal Holdings, Inc. price-consensus-chart | PayPal Holdings, Inc. Quote

Valuation and Market Positioning

Currently, PYPL stock is deemed one of the more affordable options in its sector, holding a Value Score of B. With a forward 12-month P/E ratio of 15.28X, it trades significantly lower than the sector average of 27.24X.

PYPL’s P/E Ratio (Forward 12 Months)

Image Source: Zacks Investment Research

Moreover, PayPal shares are currently trading below the 200-day moving average, signaling a potential bullish trend.

PYPL Shares Hover Above 200-Day SMA

Image Source: Zacks Investment Research

Conclusion: A Strong Prospect for Investors

PayPal’s robust portfolio, expanding partnerships, and favorable valuation position it as an attractive option for long-term investors. Currently, PayPal holds a Zacks Rank #2 (Buy) and a Growth Score of B—an encouraging combination for potential investors looking for solid opportunities.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.