PayPal Stock Dives as Stripe's Takeover Bid Collapses. 2 Reasons It Can Bounce Back.
**The company's stock plunged 18% after a $50 billion buyout fell through. But a 9x P/E, 14% free cash flow yield, and a CEO with a turnaround playbook could make this a buying opportunity.**
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### The Deal Is Dead—and the Stock Is Paying the Price
On August 27, 2026, the news broke: Stripe and private-equity firm Advent International had abandoned their pursuit of PayPal . The consortium had considered paying more than $50 billion for the company—a deal that would have ranked among the largest leveraged buyouts in history .
The market reacted swiftly. PayPal shares plunged as much as 18% in premarket trading, falling from Thursday's close of $61.47 to as low as $50.61 . By early trading, the stock had settled around $52.83, down roughly 14%—wiping out much of the takeover speculation that had propped up the stock .
The selloff is a classic "narrative event"—the business didn't change overnight, but the story around it did . The takeover premium that had been baked into the stock over the past quarter evaporated in real time.
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How We Got Here: A 40% Rally Built on Two Pillars
PayPal shares had jumped more than 40% this quarter, lifting the company's market value to about $52.6 billion . That rally rested on two pillars: better-than-expected second-quarter earnings and relentless takeover speculation .
The speculation began in February, when Bloomberg first revealed that Stripe was weighing an acquisition of parts or all of PayPal . The talks expanded to include Advent and Block, though Block later left the group .
In July, Reuters reported that the consortium had made an offer of $60.50 per share—a 28% premium to PayPal's prior closing price . But PayPal's board found the offer insufficient, and the two sides had been negotiating a potentially higher price . Holding out for more ended with no deal at all .
The abandoned bid removes the takeover catalyst that had been propping up the stock . As Loop Capital Markets analyst Dominick Gabriele told MarketWatch, the prospect of "no deal" suggests that "the stock and strategy is back in a 'perpetual seesaw'" .
But that may not be the full story.
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### Reason 1: The Fundamentals Are Cheap—Really Cheap
Here's the thing about PayPal's stock drop: the company's standalone numbers are notably attractive .
revenue, growing to $6.28 EPS on $37.89 billion by FY2028 . At the current price, that's a forward P/E below 10.
At the premarket price of roughly $52.83, PayPal trades at about **9.2 times earnings**—a fraction of the payment sector average, which is closer to 18–22 times . The company's free cash flow yield is around **14.5%**, and its return on equity is a robust **24.5%** .
That valuation is pricing PayPal like a declining business—but the business isn't declining. Revenue climbed from $29.77 billion in 2023 to $33.17 billion in 2025, while EPS jumped from $3.84 to $5.41—a 41% increase on just 11% revenue growth . The company just beat Q2 estimates by +7.8% on EPS and +2.5% on revenue, raised its full-year profit forecast, and management has outlined cost-saving steps under new CEO Enrique Lores .
Analysts project FY2026 EPS of $5.38 on $34.75 billion
Morningstar even notes that Argus Research analyst Stephen Biggar thinks PayPal may have a "strong go-it-alone story," pointing to the company's strategic reorganization and a new focus on three defined market opportunities . Those three businesses are Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services & Crypto .
William Blair analyst Andrew Jeffrey wrote last month that PayPal's "value proposition and tech stack lag disruptive competitors," but he also noted that the company's payment volumes have begun to reaccelerate .
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### Reason 2: A CEO with a Turnaround Playbook
Enrique Lores took over as CEO in March, replacing Alex Chriss . He came from HP, where he was viewed as an architect of the company's 2015 breakup with Hewlett Packard Enterprise—a massive structural transformation .
Lores has promised to set specific financial goals, change how the company reports earnings, and assign a revenue target to each business line . He has already split the company into three units: checkout, Venmo, and payments and crypto .
In April, PayPal announced a "strategic reorganization" to accelerate growth opportunities and streamline decision-making . The company also raised its 2026 profit forecast last month, a sign that management sees momentum in the turnaround .
Lores hasn't been shy about M&A either. On the company's earnings call, he said that "if we see levers or a path that we believe would create superior value for our shareholders than executing our current strategy, we would, of course, carefully consider them" . That's a signal that PayPal's leadership remains open to strategic options—even if this particular deal fell through.
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### The Bear Case: Why the Market Discounts PayPal
The cheap valuation isn't accidental—it reflects real concerns :
- The core checkout business is "the cash cow and is under siege from several competitive forces," Bernstein's Harshita Rawar wrote .
- Apple Pay and Google Pay have expanded their presence, adding pressure to PayPal's core business .
- EPS estimates have been revised down -4% over the past year—analysts are getting more cautious, not more optimistic .
PayPal's fall from a $360 billion peak in 2021 to a $52 billion company in 2026 is a cautionary tale about the shift in the payments landscape .
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### Where Does PayPal Go From Here?
The next few quarters will be critical. Lores needs to prove that his turnaround plan can deliver growth without a buyer stepping in. The company's new business structure and focus on higher-margin products will be key tests.
The stock's technical picture has also shifted sharply. After a 14-18% gap down, the daily and weekly signals have likely flipped to Sell . Key support to watch is around $50—a level that held in premarket trading.
PayPal's market cap of roughly $52.6 billion sits close to the withdrawn offer, leaving little to anchor the valuation here . But at 9x earnings with a 14% free cash flow yield, the math is getting compelling—even if the narrative is still working through the aftermath of a failed deal.
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### Frequently Asked Questions
**Q: Why did Stripe and Advent abandon their PayPal bid?**
A: PayPal found the initial $60.50-per-share offer insufficient, and the two sides were negotiating a higher price when talks collapsed. No agreement was reached .
**Q: What was PayPal's peak valuation?**
A: PayPal commanded roughly $360 billion at its peak in 2021. Its current market cap is about $52.6 billion—a fraction of that peak .
**Q: Is PayPal's business declining?**
A: No. Revenue climbed from $29.77 billion in 2023 to $33.17 billion in 2025, and EPS jumped from $3.84 to $5.41. The company beat Q2 estimates and raised its full-year profit forecast .
**Q: Who is PayPal's new CEO?**
A: Enrique Lores took over in March 2026. He previously led HP's breakup with Hewlett Packard Enterprise .
**Q: What is PayPal's valuation after the drop?**
A: At roughly $52.83, PayPal trades at about 9.2 times earnings with a 14.5% free cash flow yield—well below the payment sector average of 18–22x .
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### Disclaimer
**IMPORTANT:** This article is for informational and educational purposes only and does not constitute financial, investment, or trading advice. The information contained herein is based on publicly available sources and reflects the author's understanding as of the publication date. Market conditions, stock prices, and company performance are subject to rapid change. Past performance is not indicative of future results. You should consult with a qualified financial advisor before making any investment decisions.
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*Published: August 28, 2026*
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**Tags:** PayPal stock, PYPL, Stripe, Advent International, takeover, M&A, payments, fintech, Enrique Lores, earnings, valuation, free cash flow, buyout, stock market, investment analysis
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