PayPal Holdings has been through a tough stretch, with the stock down about 78.9% over the past five years, yet its current valuation checks still lean toward the shares looking cheap on several measures. After a recent rally and fresh attention following company updates, investors are weighing whether that apparent discount is justified by the underlying business and its prospects.

• The roughly 78.9% decline over five years means long term holders have absorbed heavy losses, which often leaves current pricing heavily influenced by reset expectations.
• Recent company progress on reorganization, cost savings and new revenue streams can support the investment case, while any stumble in executing this turnaround may weigh on how much investors are willing to pay for PayPal stock.
• PayPal screens as undervalued in 5 of 6 checks on Simply Wall St's broader valuation work, which points to the shares looking cheap on several fundamental metrics even after the recent move, as shown by its value score of 5.

The issue now is whether PayPal's current price properly reflects this apparent discount or if the market is still pricing in more long term weakness than the fundamentals support.

Is PayPal Holdings Still Cheap on Earnings?

The P/E multiple is a useful way to look at PayPal Holdings because earnings remain a key focus for this business. Right now PayPal trades on a P/E of about 10.1x. That sits well below the diversified financial industry average of roughly 16.8x and also trails the broader peer group average of about 25.1x. On this simple comparison, the stock is priced at a clear discount to many listed payment and financial platforms.

The fair P/E ratio, which blends in factors like expected growth, margins, size and risk, comes out at around 16.0x. Set against the current 10.1x, that is a wide gap and indicates that PayPal screens as undervalued on this earnings-based yardstick. Despite the stronger Q2 2026 earnings report and higher full year guidance, the market is valuing each dollar of PayPal earnings more conservatively than these benchmarks suggest.

On the preferred P/E multiple, PayPal stock currently appears undervalued relative to both its tailored fair ratio and sector averages.

The PayPal Holdings Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for PayPal Holdings are meant to connect this valuation puzzle to the specific future paths that would make the stock worth meaningfully more or less than its current price, and they sit on the Community page. Instead of giving a single output from a ratio or model, they set out the future mix of growth, margins and earnings that number relies on so you can watch how PayPal Holdings' actual progress compares over time.

Community views on PayPal Holdings sit far apart, with one side focused on asset light cash generation and the other on execution and deal risks.

Bull case: 29% undervalued

"The 'Fastlane' checkout initiative and new AI-driven ad platforms are 'asset-light' growth engines that do not require FDIC approval..."

Bear case: 11% overvalued

"The macroeconomic uncertainty, tariffs, and geopolitical issues could impact consumer spending, supply chains, and PayPal's revenue growth..."

Do you think there's more to the story for PayPal Holdings? Head over to our Community to see what others are saying!

The Bottom Line

PayPal Holdings still screens as undervalued on its earnings multiple, even after the recent share price move and a stronger Q2 2026 update. The core question is whether the company can convert its reorganization and new products into durable earnings while avoiding the execution risks highlighted by bears. If earnings quality holds up and the market gains confidence in that trajectory, the current discount may narrow. If setbacks emerge, the lower multiple could prove to be a value trap rather than an opportunity.

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.