Could Buying PayPal Stock Today Set You Up for Life?

Published in Stocks and Investing on Sunday, August 17th 2025 at 4:53 GMT by The Motley Fool
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The digital payments leader's business is maturing, but it might still be a good investment.

Could Buying PayPal Stock Today Set You Up for Life-Changing Wealth?

Investing in the stock market often involves identifying companies with strong fundamentals that are temporarily undervalued, offering the potential for substantial long-term gains. PayPal Holdings (NASDAQ: PYPL) has been a standout name in the fintech space for years, but its stock has faced significant headwinds recently. The question many investors are asking is whether buying shares today could position you for the kind of wealth-building returns that transform portfolios over time. Let's dive into the case for PayPal, examining its business model, current challenges, growth drivers, and valuation to assess if it has the makings of a life-changing investment.

PayPal's journey began as a pioneer in digital payments, spun off from eBay in 2015. It quickly established itself as a leader in online transactions, boasting a massive user base and a robust ecosystem. Today, PayPal processes payments for millions of merchants and consumers worldwide, with its platform handling everything from peer-to-peer transfers via Venmo to international remittances and e-commerce checkouts. The company's two-sided network—connecting buyers and sellers—creates a powerful moat. As more users join, the platform becomes more valuable, fostering network effects that are hard for competitors to replicate. This has translated into impressive historical growth: from 2015 to 2021, PayPal's revenue surged from about $9.2 billion to over $25 billion, driven by the explosion in online shopping and digital wallets.

However, the past few years have been turbulent. PayPal's stock is down more than 70% from its all-time highs in 2021, trading at levels that some argue undervalue its potential. Several factors contributed to this decline. The post-pandemic slowdown in e-commerce growth hit hard, as consumers returned to physical stores. Increased competition from players like Block's Cash App, Apple's Apple Pay, and emerging fintechs such as Stripe and Adyen has eroded market share in certain segments. Regulatory scrutiny, including antitrust concerns and data privacy issues, has added pressure. Moreover, macroeconomic factors like inflation and rising interest rates have squeezed consumer spending, impacting transaction volumes. In its most recent quarterly earnings, PayPal reported a modest 9% year-over-year revenue increase to $7.9 billion, with total payment volume (TPV) up 11% to $403.9 billion. While these figures show resilience, they pale in comparison to the hyper-growth rates of the past, leading to investor skepticism.

Despite these challenges, there are compelling reasons to believe PayPal could stage a comeback and deliver outsized returns. First, the company is under new leadership with CEO Alex Chriss at the helm since late 2023. Chriss, a former Intuit executive, has focused on streamlining operations and innovating to drive efficiency. Initiatives include enhancing the checkout experience with faster processing and integrating artificial intelligence for fraud detection and personalized recommendations. PayPal is also expanding its "buy now, pay later" (BNPL) offerings, which have seen strong demand amid economic uncertainty. Venmo, PayPal's millennial-favorite app, continues to grow, with monetization efforts like in-app advertising and crypto trading adding new revenue streams.

Looking ahead, the global shift toward digital payments remains a massive tailwind. According to industry estimates, the digital payments market is projected to grow from around $6 trillion in 2023 to over $10 trillion by 2028, fueled by e-commerce expansion in emerging markets like Asia and Latin America. PayPal is well-positioned here, with its international presence and cross-border capabilities. For instance, its Xoom service for remittances is gaining traction in high-growth regions. Additionally, partnerships with major retailers and platforms—such as integrations with Shopify and Amazon—could accelerate adoption. PayPal's foray into stablecoins, like its PayPal USD (PYUSD), positions it at the forefront of blockchain and crypto innovation, potentially opening doors to decentralized finance (DeFi) opportunities.

From a financial perspective, PayPal's balance sheet is rock-solid. The company generates significant free cash flow—over $6 billion in the last fiscal year—allowing for share buybacks and investments in growth. It ended its latest quarter with $18 billion in cash and equivalents, providing ample liquidity to weather economic downturns. Profit margins remain healthy, with an operating margin around 15%, and the company has committed to returning value to shareholders through a $5 billion repurchase program. Valuation-wise, PayPal trades at a forward price-to-earnings (P/E) ratio of about 15, significantly below its historical average and cheaper than peers like Visa (P/E around 30) or Mastercard (P/E around 35). This discount suggests the market is pricing in minimal growth, but if PayPal can return to double-digit revenue expansion, the stock could rerate higher.

Of course, no investment is without risks. Economic recessions could further dampen consumer spending, and intense competition might continue to chip away at market share. Regulatory changes, such as stricter rules on data usage or fees, could impact profitability. There's also the risk that PayPal fails to innovate quickly enough in a fast-evolving fintech landscape, where disruptors like neobanks and super-apps are emerging.

That said, for long-term investors with a horizon of five to ten years, PayPal appears to have the ingredients for substantial upside. If the company executes on its growth strategies and capitalizes on the digital payments boom, it could deliver annual returns in the high teens or more, compounding into life-changing wealth. Consider a hypothetical: investing $10,000 today at current prices, with 15% annualized returns over a decade, could grow to over $40,000. Scale that up, and the potential becomes clear. PayPal isn't a guaranteed winner, but its established position, innovative edge, and attractive valuation make it a stock worth considering for those seeking transformative gains. As always, due diligence and diversification are key—consult with a financial advisor to see if it fits your portfolio.

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