How PayPal's Latest Earnings Set the Stage for Investors

PayPal Holdings (PYPL) just reported second quarter 2026 results, with sales of US$8.68b and net income of US$1.10b, giving investors a mixed update on growth and profitability.

Sales for the first half of 2026 reached US$17.04b, while net income for the same period came in at US$2.22b. Earnings per share from continuing operations were lower than a year ago on both a basic and diluted basis.

At the same time, PayPal Holdings (PYPL) affirmed a quarterly dividend of US$0.14 per share, scheduled for payment on 25 September 2026. That puts cash returns back in focus alongside the company’s ongoing turnaround plans.

PayPal Holdings’ recent earnings update and dividend affirmation come after a sharp 30-day share price return of 27.53% and a 90-day share price return of 31.06%. Over the same period, the 1-year total shareholder return declined 11.93% and the 5-year total shareholder return declined 78.33%, which points to improving short term momentum alongside a weaker long term record.

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So is PayPal’s sharp rebound a sign that investors are finally reconnecting the share price with the underlying business, or is it mostly a swing in sentiment after a tough few years? The valuation answers that question.

Most Popular Narrative: 13.1% Undervalued

PayPal Holdings last closed at $59.07, while the most followed narrative pegs fair value at $68. That gap is where the story gets interesting.

The market prices PayPal (~8x earnings) as a structurally dying payments company. The numbers show something else: ~$6.8B in annual free cash flow, a net-cash balance sheet (~$13.5B cash vs. ~$11.6B debt), ~440M active accounts, and total payment volume of ~$464B per quarter, still growing ~11%. My core thesis is that PayPal does not need to grow to re-rate; mere stabilization is enough. If the multiple normalizes from ~8x to just ~12x (still well below the market), the stock rises ~50% on flat earnings.

According to Benjamin_Ziegler, this gap between price and fair value rests on steady revenue, firm margins, and a shrinking share count. The narrative leans on disciplined capital returns, modest growth expectations, and a very specific view of where earnings power could settle over time. If you want to see how those moving parts add up to $68 per share, the full story lays out every assumption in detail.

Result: Fair Value of $68 (UNDERVALUED)

However, PayPal Holdings still faces pressure if Branded Checkout growth weakens again or if lower margin products continue to squeeze overall profitability, which would challenge this entire re-rating story.

Next Steps

If the mix of risks and rewards around PayPal Holdings feels finely balanced, now is the time to look through the details yourself and stress test the assumptions behind this narrative. You can start by weighing the 3 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.