PayPal Stock Plunges 20% After Earnings -- Is It a Buy Now?

PayPal (NASDAQ: PYPL) reported fourth-quarter net that missed expectations, but that wasn't the large story. Along with its net release, PayPal announced that it is instantly parting ways with CEO Alex Chriss, who has been with the institution lone since precocious 2023 and was tasked with turning the concern astir aft its post-COVID slowdown.

With the banal trading astatine a single-digit P/E and respective cardinal maturation initiatives underway, is it a bully thought for investors to treble down connected the payments leader?

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Of course, the 4% year-over-year gross maturation that PayPal conscionable reported isn't apt to get astir investors excessively excited. But determination is simply a batch going connected that isn't yet reflected successful the numbers, and this is 1 of the large reasons I've been truthful bullish connected the banal successful the archetypal place. Consider this database of maturation initiatives:

• PayPal announced that it volition beryllium the archetypal integrated payments wallet successful OpenAI's ChatGPT, which is launching successful 2026.

• The institution has partnered with Google to make caller payments solutions to integrate crossed Google's platforms, which are utilized by billions.

• PayPal rolled retired a best-in-breed rewards programme for bargain now, wage aboriginal (BNPL) transactions.

• PayPal launched its Agentic Commerce Services for merchants.

• The institution applied for an concern banking charter.

• PayPal announced an agentic commerce concern with Microsoft (NASDAQ: MSFT) to motorboat Copilot Checkout.

This database is adjacent much awesome erstwhile you see that this is conscionable what has been announced since September. So, there's a batch happening successful the concern close now.

Incoming CEO Enrique Lores is simply a coagulated leader. He not lone led a hard transitional play astatine HP (NYSE: HPQ) but had been with that institution since 1989, erstwhile helium started arsenic an intern. He's focused connected returning PayPal's branded checkout to growth, which could assistance accelerate near-term results, alongside the much semipermanent initiatives successful the supra list.

Finally, PayPal's valuation is present absurdly cheap. The banal trades for little than 7 times expected 2026 escaped currency flow, and the institution continues to bargain backmost banal manus implicit fist. In fact, based connected expectations of $6 cardinal successful buybacks this year, PayPal could extremity up buying backmost astir 15% of its outstanding shares if this depressed valuation holds.

As mentioned, PayPal's caller results person been disappointing. In the 4th quarter, PayPal's gross grew by conscionable 4% and adjusted EPS grew by conscionable 3%. And owed to little involvement rates (PayPal gets important gross from involvement connected its cash, positive lawsuit balances) and the request to put much successful the business, PayPal gave disappointing guidance that calls for net per stock to diminution successful 2026.