Crossroads
Will PayPal SURPRISE the Stock Market? [PYPL Earnings Prediction]
10/26/2025, 3:15:03 PM
Economic Summary
- PayPal (PYPL) is modeled to report ~6.4% YoY revenue growth with branded transactions roughly +5% YoY and EPS near $1.30, which would modestly beat analyst estimates but may not be market-moving on its own.
- Company reiterated annual free cash flow guidance of $6–7B; the presenter expects Q3 FCF ≈ $2.2B and a stronger Q4 (~$2.7–2.8B), noting FCF is lumpy due to timing and asset-sale effects (BNPL sales to Blue Owl/KKR).
- A lower/stable dollar (DXY down ~5% from prior highs) eases FX headwinds for PayPal, which generates ~42–43% of revenue internationally; hedging limits but does not eliminate this benefit.
- Braintree experienced intentional take-rate increases that trimmed volume, but management expects reacceleration into Q4; omnichannel expansions (Germany debit rollout), Venmo monetization, and BNPL pushes are positioned to lift transaction volume into the holiday season.
Bullish
- Projected revenue +6.4% YoY and EPS ~1.30 could beat consensus and show improving fundamentals.
- Free cash flow guidance reiterated at $6–7B annually; Q3/Q4 FCF expected to be strong sequentially.
- DXY has fallen from earlier highs, reducing FX headwinds for PayPal (roughly 42–43% international revenue).
- Germany omnichannel rollout (≈5M debit cards) and Venmo monetization should boost transaction volume.
- Buy Now Pay Later acceleration and sales of BNPL receivables (to Blue Owl/KKR) are supporting growth and liquidity.
- Consistent buybacks (~$1.5B per quarter) are reducing share count and boosting EPS.
Bearish
- Tariff changes created a >1% headwind to branded revenue, weighing on growth.
- Temporary Steam payment disruptions and a Germany banking outage reduced transaction volume.
- Braintree's higher take-rate strategy reduced volume versus prior growth-at-all-costs approach.
- Branded transactions only growing ~5% YoY, a level that may disappoint market expectations.
- Free cash flow is lumpy and timing-dependent, which can mute market enthusiasm despite strong quarters.
Bullish tickers
PYPLOWLKKRSOFI
Bearish tickers
PYPL
PYPL
Bullish
Expected revenue and EPS beats, improving free cash flow toward the $6–7B guide, strong buybacks (~$1.5B/quarter), DXY tailwind, and product monetization (Venmo, BNPL, omnichannel).
Bearish
Tariff headwinds, Steam and Germany payment disruptions, and only ~5% branded growth create near-term revenue and sentiment risks; free cash flow is lumpy.
OWL
Bullish
Blue Owl (OWL) is a counterparty buying BNPL receivables from PayPal, which accelerates PayPal’s BNPL monetization and improves PayPal cash flow timing.
Bearish
No direct bearish points in the transcript about Blue Owl; involvement noted mainly as a buyer of BNPL receivables.
KKR
Bullish
Sale of BNPL loans to KKR improves PayPal liquidity and supports faster BNPL growth.
Bearish
KKR was mentioned as a buyer of BNPL assets historically; no explicit negative case given in the transcript.
SOFI
Bullish
Not discussed as a core bullish driver in the transcript; only noted as reporting on the same day as PayPal.
Bearish
Mentioned only as a scheduling/coverage conflict for the creator; no substantive bearish case discussed.
People mentioned
CrossroadsJamie MillerAlex ChristensenAlex GristDame Shulman