Catenaa, Thursday, February 19, 2026- PayPal stock has significantly underperformed the broader index over the past year, declining by more than 45% from its 52-week high.
Year-to-date (YTD), PayPal stock has dropped about 29%. While the company grew revenue, transaction margin dollars, and EPS in 2025, reflecting the strength of its increasingly diversified platform, the outlook for 2026 remains challenged.
The weakness in branded checkout and ongoing investment to support growth is likely to weigh on PayPal’s profitability in the short term.
Moreover, heightened competition, macro challenges, and execution gaps remain a drag.
PayPal has long been the leader in the digital payments space, consistently delivering mid-single-digit growth in total payment volume (TPV) over the past several years. However, its dominance has been eroding.
For instance, in the most recent fourth quarter, online branded checkout TPV rose 1% on a constant-currency basis, reflecting a sharp deceleration from 5% growth in Q3.
This slowdown in a core engine of the business reflects multiple challenges, including macroeconomic and competitive headwinds as well as operational pressures, which are likely to hurt the company’s near-term outlook.
The most immediate drag has come from the US retail environment. PayPal’s merchant base is heavily exposed to discretionary spending categories, and softness among lower- and middle-income consumers has translated into weaker transaction growth across its retail portfolio.
Internationally, PayPal is also facing challenges. Germany, one of PayPal’s largest markets, has cooled. Growth moderation there reflects macroeconomic softness and heightened competition from alternative payment methods.
Compounding these geographic pressures is a slowdown in previously high-growth verticals. Categories such as travel, ticketing, crypto, and gaming had been robust contributors through late 2024 and into much of 2025. As growth in these segments has normalized, the mix shift dampens aggregate TPV expansion.
Beyond external factors, management has acknowledged operational issues. Execution missteps have magnified macro and competitive pressures.
