Crossroads
Why did PayPal move +16% and fall? | PYPL Earnings
10/29/2025, 2:30:38 PM
Economic Summary
- PayPal (PYPL) delivered a Q3 'triple beat' with EPS outperformance, revenue acceleration, and raised guidance, but market reaction was dominated by partnership news rather than pure earnings momentum.
- Total payment volume (TPV) grew roughly 7–8% dollar-neutral while reported revenue lagged slightly (around 6–7% dollar-neutral), partly aided by a weaker US dollar and hedging changes.
- Monthly active users showed ~2% growth while reported active accounts were only ~1% year-over-year, implying slower user base expansion and reliance on Venmo and other products for future growth.
- Branded checkout growth trailed overall e-commerce growth, hurt by macro factors like the end of de minimis rules and temporary issues in Germany, creating near-term revenue headwinds.
- The announced partnership with OpenAI (and additional partnerships including Mastercard) acted as the primary near-term stock catalyst, pushing shares above $80 despite the quarter itself being broadly inline.
- Adjusted free cash flow is very strong; PayPal announced a 14-cent quarterly dividend (tied to ~10% of EPS) and continued aggressive buybacks, supporting shareholder returns and balance-sheet strength.
- Management issued cautious guidance citing consumer stress indicators, potential US government shutdown impacts, and China uncertainty, which tempers near-term upside into the holiday season.
Bullish
- OpenAI partnership is a major catalyst driving upside.
- Q3 saw revenue acceleration, EPS beat, and raised guidance.
- Very strong adjusted free cash flow with dividend and aggressive buybacks.
Bearish
- Cautious guidance due to signs of consumer stress and macro uncertainty.
- Branded checkout growth is lagging e-commerce, a structural weakness for payments revenue.
- Active account growth is weak (~1% YoY), slower than expectations.
Bullish tickers
PYPLOPENAIMA
Bearish tickers
PYPL
PYPL
Bullish
Beat on EPS and revenue acceleration, strong adjusted free cash flow, dividend and buybacks, plus OpenAI partnership as a catalyst.
Bearish
Cautious forward guidance, weak branded checkout growth, and only ~1% active account growth limit near-term upside.
OPENAI
Bullish
Partnership announcement with PayPal seen as a significant strategic catalyst that drove a rapid stock move.
Bearish
Not a public company; details of the contract and monetization are still unclear and may be overhyped.
MA
Bullish
Partnerships (including Mastercard) add strategic payments integrations that can incrementally support revenue.
Bearish
Mastercard partnership described as incremental and not a major standalone catalyst in the near term.
VENMO
Bullish
Management views Venmo as a key contributor to future active user and revenue growth.
Bearish
Venmo growth alone hasn't translated into large active account increases this quarter.
BRAINTREE
Bullish
Braintree accelerated to ~6% dollar-neutral growth, beginning to meaningfully contribute to revenue.
Bearish
Braintree had been a drag earlier and only modestly accelerated to low single-digit contribution.
People mentioned
Alex ChrissJamie Miller