Is PayPal a Buy, Sell, or Hold?
You’ve probably used PayPal to buy something online or Venmo to split a dinner bill. Millions of us interact with the company every day. But that familiarity leads to a big question for anyone curious about investing: just because you use a company, does that mean you should own a piece of it?
Thinking through that question is the first step in any helpful PayPal stock analysis. The terms “buy, sell, or hold” aren’t secret codes; they’re shorthand for whether you feel optimistic about a company’s future, pessimistic, or prefer to wait for more information. Answering “Is PayPal a buy, sell, or hold?” is about forming your own educated opinion.
This guide won’t provide a simple “yes” or “no” answer. Instead, it offers a framework for thinking like an investor, helping you understand the forces moving the stock so you can make your own informed decision.
Beyond Your Clicks: How PayPal Actually Makes Its Money
When you buy a concert ticket or pay for a subscription using PayPal, the company takes a small percentage of that sale as a fee. It might only be pennies on your individual purchase, but multiply that by billions of transactions from over 400 million users, and you have a massive business. This is PayPal’s primary engine: earning a tiny slice from a huge volume of digital payments.
To keep score of how much business is flowing through its system, investors watch a key number called Total Payment Volume (TPV). You can think of TPV as the grand total of all the money processed by PayPal in a given period, like a quarter or a year. A rising TPV generally means more transactions are happening, which in turn means more potential fee revenue for the company.
And what about the company’s popular app, Venmo? While it’s a fantastic tool for attracting users, especially younger ones, it hasn’t historically been a big money-maker compared to the main PayPal service. The company is actively working to change this by adding more business-focused features. For investors, this makes Venmo a source of both future opportunity and current questions—a key part of the bull and bear debate.
The Optimist’s View: 3 Reasons Investors Are Excited About PayPal’s Future
When investors decide a stock is a “buy,” they’re not just looking at how the company is doing today; they are betting on its potential to grow tomorrow. This optimistic story is often called the “bull case.” For a company like PayPal, the excitement isn’t just about its past success, but about the powerful trends it’s positioned to ride for years to come.
The bull case for PayPal boils down to three core ideas:
- The world is using less cash.
- A massive, trusted user network.
- New ways to make money (like ‘Pay in 4’).
First, the global shift away from physical money provides a massive tailwind. Think about it: every time a small business stops being “cash only” or a consumer chooses to pay with their phone instead of their wallet, it opens another door for a digital payment company. With its brand recognized worldwide, PayPal is a primary beneficiary of this slow but steady trend.
This leads to PayPal’s most powerful advantage: its network. The platform has what’s called a network effect. The more shoppers that have PayPal, the more stores want to accept it. And the more stores that accept it, the more useful it becomes for shoppers. This creates a self-reinforcing cycle that is very difficult for smaller competitors to break into.
Finally, PayPal isn’t just standing still. The company is expanding into new services like “Buy Now, Pay Later” (BNPL), which you might see as an option called ‘Pay in 4’ at checkout. This allows customers to split a purchase into smaller, interest-free installments, encouraging them to spend more and giving PayPal another way to earn revenue.
Of course, this sunny outlook is only one side of the coin. Every investment has risks, and it’s essential to understand what could go wrong.
The Skeptic’s View: 3 Big Risks Facing PayPal Today
While the optimistic view is compelling, every investment story has a flip side. Investors who are cautious—the “bears”—point to some serious challenges that could hold PayPal back. This pessimistic outlook, or “bear case,” largely centers on three significant risks that help explain why PayPal’s stock has struggled recently.
The biggest headwind is fierce competition. Ten years ago, PayPal was the undisputed king of online payments. Today, it’s a much more crowded field. Tech giants like Apple and Google are pushing their own payment systems directly onto our phones, and companies like Block (the owner of Square and Cash App) are constantly innovating. The more you see “Apple Pay” as a checkout option, the more you’re seeing PayPal’s primary challenge in action.
Next, the company is dealing with a growth slowdown. The pandemic created a massive, once-in-a-generation surge in online shopping, which was a huge benefit for PayPal. But that explosive growth was impossible to sustain. Think of it like a sugar rush wearing off. Now, the company has to prove it can still grow at a healthy pace in a more normal environment, which is a much harder task.
Finally, PayPal’s business is sensitive to the economy. When people worry about their jobs or rising prices, they tend to cut back on spending, especially on non-essential items. Since PayPal makes a small fee on each transaction, fewer purchases directly translate to less revenue. An economic downturn could therefore hit the company’s bottom line harder than businesses that sell everyday necessities.
PayPal vs. The Field: A Quick Look at Its Biggest Rivals
The competitive landscape becomes clearer when you see that each rival is playing a slightly different game. Think of PayPal as the original online payment network; it built its brand by being a trusted middleman between millions of online shoppers and sellers. Its core strength is its massive, established network—if you’ve ever bought something online, you’ve likely seen its logo.
In contrast, a company like Block (owner of Square) grew from a different angle. It started by helping small businesses—think your local coffee shop or hair salon—accept credit cards. From there, it built an entire ecosystem for those sellers, including sales tracking and banking services, alongside its consumer-facing Cash App. The debate over PayPal vs Block stock is often a bet on which of these business-building approaches will win out long-term.
Then you have the tech giants, Apple and Google. Their advantage isn’t in finance; it’s in the phone already in your pocket. Apple Pay and Google Pay are features built directly into their operating systems, making them incredibly convenient. They aren’t trying to replace your bank account, but they are aiming to be the default button you press at checkout, which is one of the key fintech industry growth trends chipping away at PayPal’s territory. For investors looking for PayPal stock alternatives in the payment space, understanding these different strategies is the first step.
Is the Stock “Expensive”? A Simple Look at PayPal’s Price Tag
After looking at the competition, a common question pops up: is PayPal’s stock itself a good deal? Just like you wouldn’t buy a car without checking its price against similar models, investors want to know if a stock’s price is fair. They have a simple tool for this.
This tool is called the Price-to-Earnings (P/E) ratio. Forget the math; just think of it as a price tag showing how expensive a stock is compared to the profit the company makes each year. A high P/E means you’re paying a lot for every dollar of profit, usually because investors expect big growth. A lower P/E is cheaper, but might suggest lower expectations.
There’s no single “good” P/E number. Its real power is in comparison. You can look at PayPal’s P/E ratio today versus its own history, or compare it to competitors like Block. Is it cheaper or more expensive than its peers right now? Answering this reveals the story investors are telling about the company’s future—a key factor behind any professional PayPal stock price target.
So, Is PayPal a Buy, Sell, or Hold for You?
Before reading, headlines about PYPL stock analysis today may have felt like random noise. Now, you can see the competing stories behind the numbers—the optimistic “bull” case versus the cautious “bear” case. You’ve moved from simply watching the stock price to understanding the forces that try to move it.
The real answer to “Should I invest in PayPal?” isn’t a secret expert opinion. It’s a personal decision based on which of those stories you find more convincing. Your choice reflects your own research and belief in the company’s ability to navigate its challenges and opportunities.
Whether or not you decide PYPL is a good long term investment for you, your journey starts with one crucial rule: never put all your eggs in one basket. By using this framework to analyze other companies, you build the confidence to make informed decisions for your own financial future.