For many years, PayPal was one of the greatest success stories in global financial technology (fintech), as the company that essentially established electronic payments and was linked to the explosion of e-commerce.
PayPal reached a valuation of $360 billion in 2021, making it one of the most expensive and popular companies in the electronic payments industry. Today, however, the picture is completely different, as its market value has fallen to such an extent that its leaders are considering selling the company for around $53 billion.
The proposal has been submitted by Stripe, in collaboration with the investment fund Advent International, and values PayPal at $60.50 per share, according to a Reuters report. Although this price would have seemed "laughable" just a few years ago, it now appears to reflect the true value of the once-mighty PayPal.
However, the Board of Directors finds it very difficult to support a deal that values PayPal at $53 billion, according to Reuters sources, although the possibility that this price could serve as a starting point for negotiations has not been ruled out. Wall Street analysts estimate that Stripe and Advent can offer a higher price as they have already secured $50 billion in bank financing and may improve their offer.
The Biggest Shock in Its History
PayPal, founded in 1998, has grown steadily. It went public in 2002, was acquired by eBay the same year, and became independent in 2014-2015, operating as a standalone company. Its figures "took off" in 2020 during the Covid-19 pandemic, when total payment volume increased by 31%, reaching $936 billion, while revenue rose by 21%, to $21.45 billion. At the same time, 72.7 million new active accounts were added, bringing total users to 377 million.
The upward trend continued in 2021. Payment volume exceeded $1.25 trillion for the first time, posting an annual increase of 33%, revenue reached $25.4 billion, and active accounts hit 426 million. Investors at the time believed the shift to electronic transactions would be permanent, driving PayPal's stock to all-time highs and its market capitalization near $360 billion in the summer of 2021.
However, with the return of economic activity to normal, the exceptionally high growth rates were not sustained. The increase in online purchases slowed, competition from services such as Apple Pay, Stripe, and other platforms intensified, and investors began to revise their expectations for the company's future growth.
Competition and Business Missteps
The most significant blow for PayPal came from the strengthening of Apple's technology ecosystem. Apple Pay managed to gain a larger market share in US electronic payments, surpassing PayPal by about 10 percentage points, changing the balance in a market where PayPal had been the undisputed leader for years.
At the same time, competitors such as Shop Pay (Shopify), Klarna, and other digital payment and purchase financing services strengthened, limiting the company's competitive advantage.
Analysts estimate that PayPal made a series of wrong strategic choices. For years, it focused on increasing user numbers and market share by offering highly competitive prices, but without converting this growth into a corresponding increase in profitability.
The company failed to timely capitalize on new trends such as digital banking, artificial intelligence applications in payments, and so-called agentic commerce—autonomous purchases made by AI systems on behalf of consumers. At the same time, significant investments in the Venmo app and Buy Now Pay Later services did not yield the expected results.
