What Happened?
Shares of digital payments platform PayPal (NASDAQ:PYPL) fell 19.8% in the afternoon session after the company reported fourth-quarter 2025 results that missed Wall Street's expectations for both revenue and earnings. The digital payments company posted revenue of $8.68 billion, a 3.7% increase year on year, but this fell short of analyst estimates of $8.78 billion. Its adjusted earnings per share of $1.23 also missed the consensus forecast of $1.29. While PayPal's pre-tax profit margin improved by 1.9 percentage points from the same quarter last year to 18.8%, the top- and bottom-line misses overshadowed this improvement. The report was broadly seen as weak, with the company failing to meet investor expectations and struggling to show strong momentum, leading to a significant sell-off in the stock.
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What Is The Market Telling Us
PayPal’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for PayPal and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock gained 10.8% on the news that the company reported third-quarter results that surpassed Wall Street's expectations for both revenue and profit. The digital payments giant posted revenue of $8.42 billion, up 7.3% from the prior year, driven by strong growth in total payment volume, which climbed 8.4% to $458.1 billion. Both figures came in ahead of analyst forecasts. Profitability was also a key highlight, with adjusted earnings per share of $1.34, beating consensus estimates by a significant 11.2%. Furthermore, the company's adjusted earnings guidance for the full year also topped market expectations, signaling operational strength. PayPal also announced it will be issuing its first-ever quarterly dividend. Separately, the company announced a major partnership with OpenAI, which will integrate PayPal as a payment method within ChatGPT. This combination of strategic AI integration, strong financial performance, and increased shareholder returns drove the stock significantly higher.
PayPal is down 27.4% since the beginning of the year, and at $42.21 per share, it is trading 52.8% below its 52-week high of $89.51 from February 2025. Investors who bought $1,000 worth of PayPal’s shares 5 years ago would now be looking at an investment worth $167.55.
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