PayPal's Core Checkout Loses Steam—The Market Notices
PayPal Holdings, Inc. (NASDAQ:PYPL) shares were steady Thursday as investors weighed ongoing softness in consumer spending across the platform.
The company continues to grapple with sluggish momentum in its core checkout business, raising fresh questions about the pace of its broader turnaround.
Bank of America Securities analyst Mihir Bhatia downgraded PayPal from Buy to Neutral, lowering the price forecast from $93 to $68, citing slower progress in revitalizing branded checkout growth.
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Analyst’s Take
Bhatia writes that product upgrades and the refreshed checkout experience have not yet driven the expected increase in button usage.
The analyst noted the company now sees this year's final quarter as a step back for branded checkout trends.
He added that management also views 2026 as an investment year, which caps near-term upside for the shares.
While the analyst still views PayPal's large consumer and merchant base and faster innovation under new leadership favorably, Bhatia argued the risk-reward looks balanced until investors see clearer evidence that the turnaround is taking hold.
Bhatia said PayPal expects branded checkout growth in the fourth quarter to slow meaningfully from the prior period. He noted this would mark the weakest expansion in several years, even after earlier management caution around tougher comparisons.
According to Bhatia, PayPal recently flagged continued softness into November, which he found surprising versus generally constructive retail updates.
Is PayPal Ceding Share To Rivals?
The analyst warned that slower branded checkout could reinforce worries that PayPal is ceding share to rival digital wallets and alternatives.
Bhatia highlighted that PayPal's branded checkout volumes have often grown more slowly than broader e-commerce benchmarks.
He said some investors fear PayPal could remain a market-share donor for an extended period, limiting any valuation re-rating.
Bhatia lowered his 2026 and 2027 earnings forecasts to reflect slower growth and higher investment spending.
The analyst now models slightly below-consensus earnings for those years and sees downside risk if 2027 also skews investment heavy.
Bhatia said PayPal has seen the spending softness it flagged in October continue into November.
He noted that the company's customers skew toward middle- and lower-income households, with greater exposure to retail and discretionary spending.
Bhatia added that this contrasts with generally upbeat holiday updates from retailers and companies in his coverage universe.
Price Action: PayPal shares are trading lower by 0.36% to $60.98 at last check on Thursday.
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