r/valueinvesting
PayPal $PYPL looks like one of the better large-cap value setups right now
PYPL is undervalued at ~8x P/E with strong FCF, massive buybacks, and stable growth, making it a solid value play.
- Extremely cheap valuation at ~8x P/E, 0.76 PEG, and 1.2x P/S for a profitable global payments platform.
- Strong cash flow and profitability with 26% net income growth and 35% EPS growth, proving the business is not dead.
- Massive share buybacks ($6B TTM) at depressed valuations significantly accelerate value compounding.
PayPal is hated, left for dead, and trading like a melting ice cube. But when I look at the actual numbers, I think the market is pricing this like a broken business when it looks more like a profitable, cash-generating company going through an execution/reset phase.
At around the low-$40s, PYPL is trading near 8x earnings, with Yahoo showing a forward P/E around 8x, PEG ratio around 0.76, and price/sales around 1.2x. That is not expensive for a global payments platform that still generates billions in profit and free cash flow.
The business is not dead. In 2025, PayPal did $33.17B in revenue, up 4% year-over-year. Operating income rose 14%, net income rose 26%, and diluted EPS rose 35% to $5.41. That is not exactly “company is going to zero” behavior.
Q1 2026 was also better than the stock price suggests. Revenue grew 7% to $8.4B, total payment volume grew 11% to $464B, and active accounts were still 439M. Payment transactions grew 7% as well. Growth is slower than the pandemic hype years, but the platform is still huge and still moving serious volume.
The buyback is the part that gets interesting. PayPal repurchased $1.5B of stock in Q1 2026 and $6.0B over the trailing 12 months. With the market cap around $38B, that is a massive percentage of the company being bought back if they can keep executing. Buybacks at 7–8x earnings are very different from buybacks at 30x earnings. That is where value can compound fast if the business simply stabilizes.
Michael Burry also seems to see the same thing. He reportedly opened about a 3.5% position in PayPal at $49.375, and later commentary around his PayPal thesis emphasized that the stock looked attractive at 7–8x earnings while buying back stock aggressively.
My bullish thesis is simple:
PayPal does not need to become a high-growth fintech darling again. It just needs to stop disappointing. At this valuation, even low-single-digit growth, margin stabilization, and continued buybacks can create solid returns. The market is pricing in permanent decline. If PayPal proves it is merely a slow-growing cash machine, the multiple probably rerates higher.
The bear case is real: Apple Pay, Stripe, Block, branded checkout weakness, management turnover, and margin pressure. But that is why the stock is cheap. You are not buying a perfect company. You are buying a hated company with scale, profits, cash flow, and aggressive capital returns.
To me, PYPL looks like a classic value setup: ugly chart, ugly sentiment, real business, cheap multiple. Not risk-free, but the risk/reward finally looks attractive.
Not financial advice. Just sharing my thesis. The market hates this thing, which is exactly why I’m interested.