What Does PayPal Have Left After Rejecting the $53 Billion Acquisition Offer?

With a market value evaporating nearly 90% from its peak, tonight's earnings report will test whether its "long-term value" can hold up.

Written by: Zennon Kapron, Forbes
Compiled by: Saoirse, Foresight News

Rejecting Stripe's acquisition was just the simplest step; the subsequent transformation will be a long and challenging road. PayPal's refusal of the $53 billion privatization offer provides a quantifiable benchmark: the long-term value generated by the company's independent operations must exceed the total cash amount offered by Stripe and Advent. Tonight (July 28) marks the day PayPal faces its first round of market validation.

On July 15, Reuters reported that Stripe and Advent International offered a purchase price of $60.50 per share, with the total transaction size around $53 billion, aiming to privatize PayPal. This offer represented a 28% premium over the closing price on the trading day before the acquisition news broke; the acquirers secured a bank credit line of approximately $50 billion. After the deal, the two acquirers would split the equity, and reports indicated that there were no plans to break up PayPal. The PayPal board made a decision to reject the offer within days and officially announced the rejection on July 20. In this transaction, Goldman Sachs and Evercore provided advisory services to PayPal, and reports suggested that the board's expected reasonable offer was close to $70 per share.

Rejecting a $53 billion acquisition means the board believes that the current management can execute the company's strategy to create value exceeding $53 billion for shareholders. However, this confidence must be backed by performance, as the root cause of PayPal's stock price dropping to $47.37 per share is its long-standing underwhelming operational performance.

PayPal's stock price peaked at $305.88 on July 23, 2021, corresponding to a market value of nearly $360 billion. By the time the acquisition offer was made, PayPal's market value was only about $44 billion, shrinking nearly 90% from its peak; in contrast, the entire payment industry continues to see growth in transaction volumes.

The Underlying Logic Behind the High Acquisition Price

Stripe has never casually thrown out acquisition offers. In 2025, the company's total transaction volume reached $1.9 trillion, a 34% year-on-year increase; in February 2026, during an internal employee stock subscription transaction, Stripe's valuation reached $159 billion. The company spent $1.1 billion to acquire the stablecoin infrastructure company Bridge while incubating the payment blockchain project Tempo. Tempo secured $500 million in financing from Thrive and Greenoaks, with a post-investment valuation of $5 billion. Since 2008, Advent International has invested over $7.8 billion in 18 payment and fintech companies, including Worldpay, Nets, and Nexi. The agency's industry research reports cite examples of Worldpay and Vantiv growing into industry leaders after being spun off from their parent companies, demonstrating that payment sectors can grow into global leaders when separated from their parent companies, a logic that perfectly fits PayPal.

From various public reports, the core demands of the acquirers can be clearly identified: the PYUSD stablecoin covering 70 global markets, the PayPal brand cash register system, Venmo, and the unique user data advantage PayPal possesses in the commercial agent sector, as noted by KBW analyst Sanjay Sakhrani. The acquirers are willing to pay a high price because they see PayPal as the foundational infrastructure for a new wave of payment. However, the PayPal board holds a different view, believing that this value can be fully realized by the company itself. Yet, the operational track record over the past five years makes it difficult for the market to easily accept this narrative.

Frequent Strategic Changes Lead to Eroding Market Confidence

Looking back to October 2021, there were reports that PayPal planned to acquire Pinterest for about $70 per share, with a total transaction size of approximately $39 billion. After the news broke, PayPal's stock price fell; when PayPal ultimately abandoned the acquisition, the pre-market stock price surged over 6%. The market's relief at the shelving of this major strategic move indicates that investors were not optimistic about this acquisition plan.

In February 2022, the management's strategy again fell short. Previously, the company set a long-term goal of 750 million active accounts, only to announce its abandonment a year later; the company also disclosed the existence of 4.5 million fake accounts on its platform and lowered its revenue expectations for the year. Under multiple negative impacts, PayPal's stock price plummeted 25% in a single day, hitting a new 52-week low. The grand vision of creating a one-stop super app also evaporated along with the user growth targets.

In August 2022, activist investment firm Elliott Management entered the scene, spending $2 billion to acquire PayPal shares and proposing a value-restructuring plan. However, within just a year, this firm liquidated its entire position. Activist investors do not easily give up on value-creating plans, and their complete exit is a negative signal in itself.

Alex Chriss took over as CEO in September 2023, claiming that his first innovation launch would amaze the industry. The market was filled with expectations, driving the stock price up over 10% within a week; however, the launch event only introduced a few unremarkable products like Fastlane login-free checkout, cashback, and smart billing, leading to a stock price drop of about 4% on the day of the event. By February 3, 2026, the growth rate of the brand cash register business fell to 1%, and the board dismissed Alex Chriss. Chairman David Dorman explained, "The pace of change and execution efficiency did not meet the board's expectations." Enrique Lores, who previously worked at HP, took over as CEO, marking the third permanent CEO for PayPal in less than three years, during which CFO Jamie Miller temporarily took over the company's operations.

In 2019, PayPal spent $4 billion to acquire the cashback plugin Honey, a deal that also deserves a review. At that time, the company positioned Honey as an engine for e-commerce growth and data mining, but by December 2024, numerous reports indicated that Honey had secretly altered affiliate promotion codes, intercepting commissions meant for content creators. In January 2026, plaintiffs submitted a revised lawsuit in a class action. Regardless of how the court ultimately rules, this acquisition has never fulfilled the promised revenue value.

The acquirers have seen through PayPal's long-standing issues: frequent strategic announcements and reversals, continuous changes in management, and a repetitive cycle. Over the past five years, PayPal has never lacked quality assets; what it lacks is a stable, long-term strategy that can be executed continuously for over two years.

Dissecting Operational Data: Weak Core Growth, Profit Reliance on Low-Margin Businesses

Latest operational data shows that PayPal's core quality business is struggling to grow, with value continuously eroding, and most new performance coming from low-margin segments. In 2025, the company's total revenue reached $33.2 billion, a 4% year-on-year increase, with a total transaction volume of $17.9 trillion. Excluding the impact of exchange rate fluctuations, PayPal's core business, the brand cash register, saw growth of only 1% in Q4 2025, and 2% in Q1 2026; the unbranded payment business Braintree grew by 11%, but this business has weak bargaining power with large enterprises, and partners continuously lower profit margins each year.

User share data highlights a survival crisis. Bernstein estimates that PayPal's market share in the U.S. digital wallet market has dropped from 90% in 2017 and 50% in 2023 to about 40% currently; Apple Pay's market share is close to 20%, and Shop Pay's compound annual growth rate is about 30%. As of the end of March 2026, PayPal's total active accounts numbered 439 million, with a net increase of only 4 million compared to December 2022. Over four years, while global e-commerce added hundreds of millions of consumers, PayPal's user growth has nearly stagnated.

The management's guidance for 2026 is cautious: transaction-related profits are expected to decline slightly, and adjusted net profits are likely to decrease slightly, at best remaining flat. Over the past twelve months, PayPal has spent a total of $6 billion on stock buybacks, repurchasing approximately 100 million shares. Motley Fool analysis suggests that at the current buyback pace, PayPal could complete the repurchase of all outstanding shares by 2032. Large-scale stock buybacks often indicate that management cannot find higher-return investment directions. The market has responded with corresponding pricing: the current stock price corresponds to a forward P/E ratio of only 8.5 times.

The Board's Confidence in Withstanding the Acquisition and Its Risks

There is indeed a logic behind being bullish on PayPal, which is also why the acquirers are willing to offer a premium and why the board dares to hold firm on a higher price, even though this persistence may ultimately prove to be a misjudgment. Venmo is projected to generate $1.7 billion in revenue in 2025, a year-on-year increase of about 20%, with 67 million monthly active users and a 50% increase in debit card transaction volume; in October 2025, PayPal partnered with OpenAI to integrate ChatGPT's one-click payment feature into the PayPal wallet, gaining a first-mover advantage in the smart payment sector; the market value of the PYUSD stablecoin reached a peak of $4 billion in March 2026.

However, these prized assets hide risks. The market value of PYUSD has shrunk by one-third since its peak in March, now standing at about $2.8 billion, while the stablecoin infrastructure that the acquirers are building continues to expand steadily; it took PayPal ten years after Venmo's breakout to find a mature commercialization path; the ChatGPT payment partnership lacks exclusive barriers, as OpenAI has established partnerships with most payment service providers.

Michael Burry, an investor heavily invested in PayPal, believes that $60.5 is just the starting price for the acquisition, and the company's reasonable valuation is close to $100 per share. Cantor Fitzgerald's segment valuation method estimates PayPal's reasonable valuation at about $70 per share, aligning with the board's psychological price point. These valuation judgments may hold, but there is a core question that remains unanswered: how can a company that has frequently stumbled and lacks execution capability over the past five years push its share price from $47 to $100? The ultimate value of quality assets that cannot be monetized belongs to the party that can realize commercialization; the acquirers have demonstrated far superior execution capability in recent years compared to PayPal.

Tonight, the Earnings Report Will Decide the Outcome

PayPal will release its Q2 earnings report tonight (the earnings report is expected to be published between 6:00 PM and 7:00 PM Beijing time on July 28, with the earnings call starting at 8:00 PM). This performance report serves as a public judgment on the significant decision to "reject the acquisition." Enrique Lores must deliver clear and impressive results: the brand cash register business must return to accelerated growth, Venmo must maintain steady expansion, and there must be a clear explanation of how PYUSD and the smart payment partnership will generate revenue. Not only does this quarter need to meet expectations, but every quarter in the coming years must show growth; only in this way can it be proven that the long-term value of independent operation exceeds $53 billion. Enrique Lores officially took office in March this year, having led the company for only five months.

The Q1 earnings report has already exposed the current trust dilemma: revenue of $8.4 billion, a 7% year-on-year increase, exceeded market expectations, but the stock price continued to weaken, primarily due to the management's cautious performance guidance. This is the vicious cycle brought about by a lack of credibility: even if the earnings report data exceeds expectations, the market will still discount it; investors directly choose to ignore the management's strategic commitments. Valuations remain under pressure until the acquirers break the deadlock with real cash offers, as Stripe and Advent have done. However, the board chose to reject, betting on the new CEO's short-term strategy, while shareholders have yet to see a complete and actionable execution plan.

Stripe and Advent can afford to wait patiently. The entire financing plan has been prepared, and the business logic of the acquisition will not diminish over time; as long as PayPal's subsequent quarterly performance continues to be lackluster, shareholders will increasingly lean towards accepting the acquisition. Over the past five years, PayPal has fully demonstrated that holding quality assets and transforming those assets into stable, continuous revenue are two entirely different capabilities. Now, the board is betting the value of $53 billion for all shareholders, wagering that PayPal will finally bridge the gap in asset monetization capability. Currently visible chips include this CEO who has just completed 20 weeks in office and a transformation plan that has not yet been fully disclosed to shareholders. Starting from July 28, the market will validate whether this confidence can hold up, quarter by quarter.