PayPal stock remains in a tight range this month as traders waited for the upcoming earnings, which will provide more color on its long-running turnaround. PYPL was trading at $69.7, down by ~25% from its highest point this year.
PayPal faces long-term stablecoin headwinds
PayPal is one of the biggest payment processors globally. It operates a consumer and business-facing business that simplifies how people move money and pay globally. It has accumulated over 400 million customers globally.
The company has faced major challenges in the past few years as its growth has decelerated. This explains why its stock has moved from a record high of $300 to the current $69.
PayPal is facing another major long-term challenge as the stablecoin business booms. These coins are solving one of the biggest challenges that PayPal’s retail and individual customers complain about: fees.
PayPal normally charge customers between 2% and 3% on most transactions. This means that a $10,000 transaction costs about $100. In contrast, a similar stablecoin transaction would cost almost nothing depending on the network.
PayPal has recognized this challenge and has already launched its stablecoin: PYUSD. Recent data shows that the PYUSD has become one of the fastest-growing stablecoins in the industry.
Its assets have jumped from below $1 billion to almost $3 billion today. This means that its stablecoin business will likely bring in over $100 million in the next 12 months.
PayPal has also launched a stablecoin payment solution that allows businesses accept these tokens. It is now offering a promotional fee of 0.99% for merchants, which is lower than its current transaction fees.
PayPal earnings ahead
Looking ahead, the next key catalyst for the PayPal stock price is its earnings, which will come out on Tuesday. These numbers will provide more color on its stablecoin initiatives and its revenue and profitability growth.
The 32 analysts tracked by Yahoo Finance have an average revenue estimate of $8.23 billion. The most optimistic analyst has a target of $8.47 billion. This revenue will be a 4.9% annual growth rate.
Analysts also expect that PayPal’s earnings will remain stagnate at $1.2. The annual EPS is expected to be $5.24, up from $4.65 in 2025, while the revenue will grow by 4.14% to $33.1 billion.
While PayPal is no longer a growth stock, it has two main benefits. One, it is actively reducing its outstanding shares from 1.17 billion in 2021 to 960 million today. It will likely use its strong cash generation to buy more shares over time.
The other key benefit is that its stock is a bargain. Data shows that its forward P/E multiple is 11.9, down from the S&P 500 average of 21.
PayPal stock price technical analysis
PYPL stock price chart | Source: TradingView
The daily timeframe chart shows that the PYPL stock price has remained in a tight range in the past few months. It is oscillating at the 50-day and 100-day Exponential Moving Averages (EMA).
The stock is hovering at the 38.2% Fibonacci Retracement level. It has remained inside the descending channel, which is part of a bullish flag pattern.
Therefore, the stock will likely have a strong bullish breakout, potentially to the upper side of the descending channel at $75.
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