Concerns Persist Despite Venmo's Global Expansion: The "Profit Margin Wall" Challenging PayPal

Opinions on PayPal are currently divided once again. On the surface, the company is clearly on the offensive. Venmo has connected with PayPal's global network, enabling user-to-user transfers across 90 markets. Additionally, the USD-pegged stablecoin PYUSD has expanded to 70 markets. The Buy Now, Pay Later (BNPL) service is also seeing growth, with total payments expected to exceed $40 billion by 2025, marking a year-on-year increase of over 20%. If you only look at the business strategies, you might be inclined to say that "the groundwork for renewed growth is being laid."

However, the market is not that simple. PayPal's full-year revenue for 2025 is projected to be $33.172 billion, a 4% increase year-on-year, with transaction margin dollars at $15.465 billion, a 6% increase. The total payment volume is expected to be $1.79 trillion, with 439 million active accounts. The numbers alone suggest a robust foundation. Yet, the company itself admits that its brand payment execution is "not at the desired level," and its 2026 outlook hints at near-term investment burdens and profit pressures. The non-GAAP operating margin for the fourth quarter is 17.9%, down 9 basis points from the same period last year, and the 2026 non-GAAP EPS outlook is cautiously described as "slightly decreasing to slightly increasing" for the full year, with a "mid-single-digit percentage decrease" for the first quarter.

In other words, PayPal is currently seen as a company with "many seeds of growth, but unclear timing for harvest." The international connection of Venmo, the expansion of PYUSD, and the growth of BNPL are not wrong directions. In fact, the strategy of bundling remittances, cross-border payments, digital assets, and consumer finance into one ecosystem is not something other companies can easily imitate. The problem is that these efforts have not yet manifested in numbers that can overshadow short-term profit margin deterioration or the weakness of existing businesses.

The original article emphasized this very contradiction. PayPal is accelerating its global expansion to capture new revenue streams, but behind the scenes, headwinds against profit margins are strengthening, making it a challenging situation for investors to assess. The article highlighted the decline in transaction margins, forecasts below market expectations, and analysts' cautious stances. In reality, the current analyst ratings are centered around "Hold," with MarketBeat reporting that out of 45 analysts, 31 recommend holding, 8 recommend buying, and 6 recommend selling. It's neither overly bullish nor entirely pessimistic; rather, "wait and see" is closer to the truth.

The stock price reaction has also reflected this hesitation. According to Reuters, PayPal's stock fell by 19% following the February earnings report, the change in CEO, and the lower-than-expected 2026 profit outlook. The fourth-quarter revenue was $8.68 billion, and earnings per share were $1.23, both below market expectations. Even with news of expansion strategies, investors were not quick to jump in, likely because they were looking at "restructuring the core business" and "the quality of earnings" before the flashy new initiatives.

So, how is it viewed on social media? Looking at publicly accessible investor communities, the reactions are quite raw. The bearish camp repeatedly raises the point, "Isn't PayPal ultimately a value trap?" On Reddit, there is a noticeable sentiment that despite massive stock buybacks since 2022, the stock price has not been rewarded, with comments like "The buybacks aren't effective because the business momentum itself is slowing." There are many concerns about the declining competitiveness of brand payments and competition with giant platforms like Apple and Google.

On the other hand, the bullish camp's arguments are also clear. In discussions on Reddit's Value Investing threads, there is a view that "the market is too pessimistic about PayPal," citing the high growth rate of Venmo, still low monetization rate, high usage frequency of BNPL users, and the massive free cash flow generation capacity. Another post summarized it as, "If Venmo is winning, that's actually a strong point for PayPal." In other words, among individual investors, there are quite a few who see PayPal not as a "finished company" but as a "company with multiple winning strategies that is undervalued by the market."

What supports the bullish camp's expectations is the potential for expansion in cross-border payments. With Venmo's new connection, it is now possible to send money to PayPal users based on phone numbers, with currency conversion and fees displayed in advance. According to PayPal, 49% of surveyed U.S. users have experienced installing or switching to another app for remittances, and 30% have forgotten to repay due to the lack of a suitable app. This expansion aims not just to increase the number of countries served but to address the everyday inconvenience of "fragmented remittance apps." If this works well, the network value of PayPal will certainly increase.

The expansion of PYUSD to 70 markets should be read in the same context. PayPal is promoting PYUSD as a means to achieve faster and lower-cost cross-border money transfers than traditional payment rails. Users can hold and send/receive PYUSD within their PayPal accounts, with rewards offered in target regions. For businesses, it is explained to lead to shorter collection times and improved working capital efficiency. The concept is extremely straightforward. However, related reports on Stocktwits indicated that even after this announcement, individual investor sentiment towards PayPal itself remained bearish, while sentiment towards PYUSD was neutral. There is interest in the new initiatives themselves, but questions remain about whether they will truly increase shareholder value.

What is important here is not that PayPal lacks "growing businesses," but that "growing businesses have not yet translated into overall company reassurance." Looking at the numbers for 2025, both revenue and transaction margin dollars are increasing. BNPL is also growing. Venmo is expanding. PYUSD is finding more uses. Yet investors remain cautious because the focus of growth has shifted from a full recovery of existing high-profit businesses to investments in new areas. What the market seeks is not "future potential" but "today's earnings improvement," and PayPal is struggling at that midpoint.

Therefore, the next focus for PayPal is simple. Will Venmo's international remittances truly increase usage frequency? Will PYUSD become established enough to change the cost structure of cross-border payments? Will the high growth of BNPL lead to high-quality profit growth rather than just an increase in transaction volume? And most importantly, will the restructuring of brand payments become visible? When several of these factors advance simultaneously, the current evaluation of "undervalued but uncertain" will begin to change.

What can be said at this point is that PayPal is not a stagnant company, but it is also not yet a company that can be confidently called a regrowth company. There are certainly more flashy announcements. There is indeed expectation on social media. However, that expectation is not enthusiasm but rather a quite conditional expectation. Bullish individual investors see it as "strange for a company of this scale, cash generation capacity, and network to be sold off this much." The bearish camp counters with "Despite talking about the same hopes for years, the stock price doesn't believe it." The real issue surrounding PayPal is not whether there is a strategy, but whether that strategy can be transformed into convincing profits and stock prices.

Source URL

An article summarizing PayPal's expansion strategy and profitability concerns
https://www.aktiencheck.de/news/Artikel-PayPal_s_Strategic_Push_Meets_Profitability_Concerns-19599667

PayPal official IR materials (used for checking Q4 and full-year 2025 earnings, revenue, profit margin, and EPS outlook)
https://s205.q4cdn.com/875401827/files/doc_financials/2025/q4/PYPL-4Q-25-Earnings-Release.pdf

PayPal official 10-K (used for checking basic data such as active account numbers, total payment volume, and market numbers)
https://s205.q4cdn.com/875401827/files/doc_financials/2025/q4/10-K.pdf

PayPal official newsroom (used for confirming the expansion of PYUSD to 70 markets)
https://newsroom.paypal-corp.com/2026-03-17-PAYPAL-BRINGS-PAYPAL-USD-TO-USERS-ACROSS-70-MARKETS

Venmo/PayPal official announcement distribution (used for confirming Venmo's connection to 90 markets via the PayPal network and survey data)
https://www.prnewswire.com/news-releases/200-million-more-friends-on-venmo--send-money-to-paypal-users-around-the-world-302721542.html

Reuters (used for checking stock price plunge after earnings, CEO change, and market reaction to cautious outlook)
https://www.reuters.com/business/paypal-sees-2026-profit-below-estimates-holiday-quarter-results-fall-short-2026-02-03/

MarketBeat (used for checking analyst evaluations centered on Hold)
https://www.marketbeat.com/stocks/NASDAQ/PYPL/forecast/

Reddit / r/stocks (used for understanding bearish "value trap" arguments and dissatisfaction with stock buybacks)
https://www.reddit.com/r/stocks/comments/1quohx3/rstocks_daily_discussion_technicals_tuesday_feb/

Reddit / r/ValueInvesting (used for understanding bullish "undervalued" arguments and expectations for Venmo, BNPL, and cash generation capacity)
https://www.reddit.com/r/ValueInvesting/comments/1qxj4po/paypalpypl_has_entered_deep_value_territory/

Reddit / r/stocks (used for understanding individual investors' views evaluating Venmo's value and PayPal's cross-border payment moat)
https://www.reddit.com/r/stocks/comments/1qvewzi/pypl_at_42_im_down_27_the_ceo_just_got_fired_and/

Stocktwits related articles (used for understanding individual investor sentiment during PYUSD expansion)
https://stocktwits.com/news-articles/markets/cryptocurrency/pay-pal-eyes-70-country-pyusd-expansion-with-rewards-for-its-stablecoin/cZ3E5NiRIXb