Chapter 1: Who are the potential buyers for PayPal?
Who is adding PayPal to their checkout cart? Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoyum, joined today by Rachel Warren and Lou Whiteman. Guys, the big talk of the market this week is PayPal, which has been in this strange zone of value stock. Can't seem to get its shares going anywhere. They have changed CEOs.
But now there's talk that they may be acquired by someone, may put themselves on the block. Lou, Does this make sense for somebody else to buy them?
Chapter 2: What factors contribute to PayPal's current valuation?
And who possibly could actually pull off a deal and not kind of destroy their own business in the process?
First thing we need to make clear is PayPal is not a distressed asset, period. The business is healthy. The business is fine. The issue is it's a low growth business. Shares are off 84% from their all-time highs. Some of that was kind of COVID-19. hysterica. The company is profitable. Cash generation is strong.
Chapter 3: How is PayPal's business performance assessed?
Share count is down 20% plus over the last five years. That is not a distressed asset. When I first saw these reports, my thought was private equity.
I mean, everything I just said, this is an ideal scenario to take a company private, use those cash flows to pay down the debt, and also kind of get out of this quarter to quarter spotlight of when will you grow, which I think would help this business. We'll see what's going on here. One thing I think, though, is that PayPal is not on the block. So, they haven't put themselves up for sale?
I don't believe that. I think that the market, that opportunistic potential acquirers are looking at that drop and realizing everything I said is true, that this is not a distressed asset and maybe we can do a deal here. We can talk in a second about rumored buyers, potential buyers. To me, someone like Silver Lake Partners makes a ton of sense on the private equity side.
Even there was talk of Addian. the European payments company, which, you know, kind of create a, just kind of give them everything they need in the U.S. and build on their strengths elsewhere. I think that if PayPal did go on the block, there'd be a lot of at least people wanting to look at it, but we'll see where this goes.
Rachel, what are you thinking when you hear a company like PayPal? It has been in value territory. One of the options is to just keep buying back shares. They can buy somewhere between 10% and 15% of shares outstanding pretty easily each year. But does a sale maybe make more sense?
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Chapter 4: What does Axon's recent earnings report reveal?
I think it's possible. And I agree with Lou. This is not a distressed business. I do think there's an argument to be made. This is a really undervalued business as it's trading right now. Shares are down about 40% over the last 12 months, about 80% to 85% from their 2021 peak. And you look at how the company's market cap has fallen to about $43 billion.
It does make a full takeover more feasible for potential mega cap suitors. I mean, you have to think about the really strategically valuable assets that PayPal could bring to the table if they were acquired.
Chapter 5: How is Axon transitioning from hardware to software?
I mean, you've got Venmo, right? They're widely recognized as the most pristine asset for PayPal with high growth, about 20% annually. There's a lot of popularity among younger demographics. PayPal operates one of only four globally recognized payment networks. You know, they process nearly $2 trillion in annual transaction volume. You've got the Braintree business, right?
That's the unbranded processing business for large corporate clients that could be really attractive to a potential buyer. And even the incoming CEO, Enrique Lores, he has a history of breaking up complex businesses. I mean, there's been some speculation that maybe he was even brought in to lead a sale or or major structural overhaul. So I do think this talk makes sense.
I mean, we're going to have to see if it's more than just rumors, but it is something that I think is intriguing and perhaps makes more sense for the business than say four or five years ago.
Lou, Stripe was one of the names that has come up this week. They're still private, but there's a lot of hype behind Stripe. They're very highly valued. I think $159-ish billion valuation, whereas PayPal is profitable and only has about a $40, $45 billion valuation. Strategically, would Stripe make any sense?
And then if we want to open the can of worms, how in the world would they pull off a deal?
Yeah, the valuation is really interesting. I'd love to know that in the time of a deal, whether or not PayPal shareholders would agree with that valuation.
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Chapter 6: What insights can we gain from Cava's quarterly performance?
When you are in private markets, you're not being marked every day the way that PayPal is. So it's very possible that their market clearing price is more like $60 billion.
Yeah. I mean, the great thing about the public markets is that all of the buyers, all of the sellers, the sheer mass of people, that's how you get to price discovery. So, yeah. But that's neither here nor there. Look, Stripe is a really, really good business. They have been a great success. But this would be an interesting deal for a couple of reasons.
For one, I don't know what antitrust would think of this.
Chapter 7: What challenges is Cava facing in the current market?
I think it probably gets through with regulators, but I don't think they would like it. Secondly, Stripe, has sort of made its mark as being the agnostic rails for payments, for them to basically get into competition with a lot of their customers. I don't know how that would go over or what that would do. Again, opportunistic is so important here. This is how Stripe could go public.
That would be a really, really complicated deal. I think it would be easier for them to just raise gobs and gobs of cash, maybe through debt, and then do an offering afterwards. I am personally dismissive of the idea of a reverse merger to take Stripe public.
But look, again, how much of this is Stripe actually saying we need to buy this and how much of this is just seeing a decent asset marked down and just saying, hmm, that's interesting. That's my question.
Yeah. Rachel, what do you think? Does Stripe make any sense as a buyer? It's fun to talk about, but every time I think through it, Lou's right. They are kind of the Switzerland. They're very much a digital company. PayPal is trying to move more into the physical world in a lot of different ways. So I don't know. There could be pluses and minuses.
Chapter 8: What future growth opportunities exist for Cava?
I do think it could make sense. I mean, the important thing to remember is Stripe is really dominant in business-to-business and merchant infrastructure, but they really lack a direct consumer brand, which, of course, that's something that PayPal could provide. I mean, for a long time, Stripe has really been known as this sort of digital bridge.
They allow businesses to accept payments over the internet and in person. They handle that really complex technical and banking infrastructure. They processed about $1.9 trillion in total payment volume in 2025. That was up about 34% year over year. It's a really, really robust business. Obviously, there's the valuation gap.
They're reportedly valued about four times greater than what we currently see PayPal's valuation at. Another thing that's kind of interesting is both Stripe and PayPal have been moving much more deeply into crypto rails. So you could see how a merger could maybe create a dominant global stablecoin player. That's something that I think there might be some interest in.
There's also this idea that Stripe might only target very specific units, right? Like Venmo, for example, to gain a consumer wallet or Braintree to scale their merchant processing business. I think right now, this is a lot of speculation. You know, Lou did a good job of outlining kind of the different ways this could go
I do think it's very possible that we could look at this deal as maybe acting as a mechanism for Stripe to go public. And that would allow the combined entity to trade, of course, on a stock exchange, which is something we have seen a lot of rumors for years that Stripe was going to IPO and has reportedly kept delaying that. So I think there's a lot more questions than answers right now.
I do think, though, that if, in fact, Stripe is interested in buying PayPal, it does pose an intriguing opportunity. This is something that I think we're going to want to watch closely.
I'm going to make a bold prediction here, and that's that nothing is going to happen. And there's nothing more bold than say nothing. But look, PayPal's board just changed the CEO. They put out an investor deck saying there's 100 ways for us to grow. Now, I sort of think that if you have 100 ways, it probably means you don't have one. So I'm not going to Take that as face value.
But this is not a company that is saying, you know what, let's fire the CEO, bring in a new CEO with a plan and also put ourselves for sale. This is someone being opportunistic, seeking to get a deal.
The funny thing here is, is that if you buy that premise that the board is not looking to sell, the only way to change their mind is to maybe get rid of the opportunistic part of it by significantly overpaying. I think that PayPal's destiny is to be acquired one day. I don't think it's going to be in 2026, but I could be wrong.
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