PayPal Stock Looks Dirt Cheap. Time to Buy?

• PayPal shares have lost nearly a third of their value in 2025.

• User engagement trends are moving in the wrong direction.

• An extremely cheap valuation helps make up for the challenges the company is facing. But are shares cheap enough?

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PayPal (NASDAQ: PYPL) stock has been crushed this year. Accelerating revenue growth hasn’t been enough to help shares climb out of a multiyear slump. Adding to the stock’s carnage, shares slipped earlier this week when management raised new concerns about growth in the company’s core checkout business.

The digital payments specialist’s revenue recently returned to mid-single-digit growth — and earnings are climbing at an even faster rate. Yet, recent remarks from PayPal’s chief financial officer are a good reminder that the company still faces some challenges it needs to work through before it’s firing on all cylinders again.

This begs the question: Is the stock’s cheap valuation a reason to buy, or an accurate reflection of deeper problems underneath the surface?

It’s worth emphasizing that PayPal’s business fundamentals have seen dramatic improvement recently. In the third quarter of 2025, PayPal’s revenue rose 7% year over year — an acceleration from 5% growth in Q2. Additionally, the company’s adjusted earnings per share increased 12% year over year to $1.34.

Engagement, however, remains a weaker spot for PayPal. Active accounts stayed near 438 million at the end of the third quarter, up only 1% year over year and in line with Q2. Additionally, total payment transactions in Q3 declined 5% year over year. And transactions per active account on a trailing-12-month basis dipped 6% to 57.6, suggesting that many users are transacting less frequently than before.

Speaking at the UBS (NYSE: UBS) Global Tech & AI Conference, CFO Jamie Miller said that growth in PayPal’s branded checkout business would be “at least a couple of points slower” in the fourth quarter than it was in the third quarter. Branded checkout volume grew in the mid-single digits in the third quarter, so Miller’s comment implies growth near 3% or worse during the current period, even though overall guidance for the quarter did not change.

Branded checkout remains one of PayPal’s most important franchises. It is one of the primary ways many online shoppers encounter PayPal on merchant sites and inside apps — and it likely boasts a healthier margin than some of the company’s lower-fee processing work, such as payment service provider transactions. A slowdown during the holiday season points to persistent competitive pressure from card networks and major technology platforms that are expanding their own checkout offerings.