PayPal Earnings: Growth Slows as Management Focuses on Profitable Business

Narrow-moat PayPal had previously warned that fourth-quarter growth would be a bit soft as the company transitions to a more profitable base of business, and that was indeed the case. We think weak headline results and a cautious approach to 2025 guidance sparked a negative reaction from the market. However, we think management’s strategy is sound and lays the groundwork for solid growth and modest margin expansion over time. We will maintain our $104 fair value estimate and see shares as undervalued.