PayPal (NASDAQ:PYPL) has experienced a year-to-date decline of approximately 17%, contrasting with the S&P 500’s gain of about 2%. In Q1 2025, PayPal reported earnings of $1.33 per share, exceeding estimates; however, revenue fell short at $7.8 billion, reflecting only a 1% increase year-over-year. The trade war and intensifying competition from companies like Apple Pay and Shopify have contributed to economic uncertainty and challenges in cross-border e-commerce.
At the current market price of around $71, PayPal appears to be undervalued. Its price-to-sales (P/S) ratio stands at 2.3, compared to 3.0 for the S&P 500, while the price-to-earnings (P/E) ratio is 17.8 versus the benchmark’s 26.4. Over the last three years, PayPal’s revenue grew at an average rate of 7.8%, outperforming the S&P 500’s growth of 5.5%. Despite recent challenges, PayPal maintains a strong balance sheet, with a debt-to-equity ratio of 13.4% and cash reserves of $11 billion from total assets of $81 billion.
