PayPal shares dropped early Friday after news broke that potential buyers have ended talks. Now, shareholders must depend on the company’s own turnaround efforts.
Stripe and Advent International have dropped their plans to buy PayPal after earlier offering over $50 billion, according to Bloomberg sources. Stripe and Advent did not comment, and PayPal has not yet responded.
Shares fell sharply in premarket trading, bringing PayPal’s value down to about $52.6 billion. This is much lower than its 2021 peak, when it was worth over $280 billion. Investors are left weighing whether chief executive Enrique Lores, who took over in March, can drive a turnaround on his own. Two factors offer some reason for optimism.
First, PayPal still has strong fundamentals. It handles almost $2 trillion in payments each year, serves about 440 million active accounts, and owns Venmo, the leading peer-to-peer payment app in the U.S. PayPal is also one of only four global payment networks, along with Mastercard, Visa, and American Express.
However, PayPal’s branded checkout business has come under pressure as competitors like Apple Pay and Google Pay gain ground in digital wallets. The second reason for optimism is PayPal’s restructuring plan. The company plans to split into three segments: checkout, consumer financial services, and payment processing. This could help it focus better or prepare for a future spinoff. PayPal also aims to save $1.5 billion over the next two to three years.
PayPal’s latest quarterly results were encouraging. Second-quarter revenue rose 5% to $8.68 billion, beating expectations, and the company’s outlook for profits has improved.
