MW Why PayPal's stock is falling despite upbeat earnings guidance

By Emily Bary

Payment-volume growth slowed within the company's core branded checkout business, but the stock is 'down more than it should be,' according to one analyst

PayPal Holdings Inc. lifted its outlook on two closely watched profitability metrics, but its shares are down more than 9% midday Tuesday, with analysts flagging a slowdown in payment volume for the company's core checkout business.

Total payment volume for branded checkout was 5% in the second quarter, after adjusting for currency, whereas growth on the metric was 6% in the first quarter. Tariff pressures hurt branded growth in the latest quarter.

Mizuho analyst Dan Dolev also flagged that while transaction-margin dollars rose 7% on a reported basis, ahead of his projection for 5% growth, the latest quarter's growth was helped by a "one-time benefit from renewal and expansion of a key payment partner relationship." Transaction-margin dollars is a metric that tracks the company's ability to process payment volume profitably.

Dolev noted that there are "some optics involved that are hurting the stock" but said he thinks PayPal's (PYPL) "strong fundamentals should ultimately prevail."

See also: Earnings push Fiserv's stock toward its worst year since 2008. Here's what worries Wall Street.

Some PayPal investors have been worried about the company's core branded-checkout business, which faces competition from Apple Inc.'s $(AAPL)$ Apple Pay and others. PayPal Chief Executive Alex Chriss said in the release that momentum in the latest quarter reflected "continued strength across many of our strategic initiatives ranging from PayPal and Venmo branded experiences to PSP and value-added services," with PSP referring to the company's unbranded checkout business.

Barclays analyst Ramsey El-Assal noted progress in unbranded checkout, as PayPal continues to focus on "price to value," meaning that revenue and volumes for the business are lower but transaction-margin-dollar growth is higher.

El-Assal said he thinks PayPal's stock is "down more than it should be" given the "largely solid" results overall.

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Another issue that has long loomed over PayPal's stock is whether the company can make sufficient money off its popular Venmo peer-to-peer platform. The company said that Venmo revenue growth exceeded 20% in the second quarter to log its highest growth rate since 2023.

Total payment volume for Pay with Venmo, which lets people use Venmo as a checkout option, was up more than 45% over last year, while the company saw over 40% growth in monthly active accounts for the Venmo debit card.

The company is trying to appeal to younger users with things like co-branded Venmo debit cards at schools that are members of the Big 12 conference.

In terms of its outlook, the company now expects $15.35 billion to $15.5 billion in transaction-margin dollars. PayPal's prior outlook was for $15.2 billion to $15.4 billion. PayPal also now models $5.15 to $5.30 in adjusted earnings per share, whereas it was previously calling for $4.95 to $5.10.

For the third quarter, PayPal models $1.18 to $1.22 in adjusted earnings per share, while analysts tracked by FactSet are looking for $1.21.

-Emily Bary

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July 29, 2025 12:33 ET (16:33 GMT)

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