Haverhill Financial Research · Analysis · October 26, 2026
De-risking into the print
$$PYPL ( ▲ 0.53% ) was one of the most active names on StockTwits Monday as the stock slid roughly 4% to close at $54.60 — a company-specific move on a day the S&P 500 rose. The reason is on the calendar: PayPal reports third-quarter results before the open on Tuesday, October 27, and after the year this stock has had, nobody wants to carry risk into the print. The selling came even as Truist nudged its price target up to $58 (Hold), and it dragged the whole checkout-finance cohort with it — Klarna and Affirm both finished lower.
The market is paying about ten times forward earnings for a business guiding to ~$5.38.
How it got this cheap
PayPal's 2026 has been brutal in a specific way: the business keeps performing adequately and the stock keeps getting punished. The second quarter, reported July 28, beat on both lines — non-GAAP EPS of $1.38 against a $1.28 consensus, revenue of $8.68 billion against $8.51 billion, total payment volume up 10% to $486 billion. Management guides to roughly $5.38 in full-year non-GAAP EPS, more than $6 billion of adjusted free cash flow, and about $6 billion of buybacks; the share count has already shrunk from 977 million to 882 million.
Then there is the deal that died. In late August, a reported take-private approach at $60.50 per share — more than $53 billion, attributed in coverage to Stripe and Advent — collapsed, and the stock fell double digits on the news. With the M&A floor gone, the stock sits more than 80% below its 2021 peak near $310, at roughly ten times forward earnings versus a five-year average around sixteen.
The bear case is the reason for the discount, and it's not frivolous: the take rate keeps compressing (0.80% versus 0.87% a year ago), transaction-margin dollars grew only about 1% last quarter, and non-transaction operating expense growth was guided up to 7–8% from about 3% — a margin squeeze from both directions while Apple Pay, Shopify, and Stripe press on branded checkout.
What we're watching Tuesday morning
Branded checkout volume. The guide was for roughly 2% growth. This is the single number that decides whether the core franchise is stabilizing or eroding.
Transaction margin dollars. Guided to slightly positive growth; anything better re-rates the stock faster than an EPS beat would.
The $5.38 guide. Whether management raises, holds, or trims full-year EPS — and Q3 itself was guided to be down low-single-digits from last year's $1.34, so the bar is low.
Venmo monetization and buyback pace. The two levers that work even if growth stays slow.
Sources and disclosures
Figures come from PayPal's second-quarter 2026 results reported July 28, 2026 (detail via Zacks), pre-earnings coverage from Yahoo Finance and 24/7 Wall St (October 26, 2026), and reporting on the abandoned take-private approach from late August 2026. The Q3 report is scheduled for before the open on October 27, 2026. Report dates can change.
Disclosures. Haverhill Financial Research is a publisher of general financial commentary. This article is not personalized investment advice and does not consider any reader's financial situation; readers should do their own research. Nothing here is a recommendation to buy or sell any security. The author of this post does not hold positions in the companies named. Data as of October 26, 2026.
