What Happened?
Shares of digital payments platform PayPal (NASDAQ: PYPL) fell 3.8% in the afternoon session after OpenAI unveiled a financial offering powered by Stripe, a key competitor, adding to a series of negative developments for the company in Europe. OpenAI's new offering allowed users to buy physical goods, a move that increased competitive pressure on PayPal in the AI space. This development followed a day after PayPal's stock had its best session in over a month.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy PayPal? Access our full analysis report here, it’s free.
What Is The Market Telling Us
PayPal’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 5.6% on the news that the stock's positive momentum continued as the company announced a landmark $7 billion buy-now-pay-later (BNPL) partnership with alternative asset manager Blue Owl Capital.
The multi-year agreement allows Blue Owl to purchase receivables from PayPal's U.S. "Pay in 4" product. This strategic move enables PayPal to expand its BNPL portfolio without the associated capital constraints or credit risk, aligning with its goal of a "balance-sheet-light" model. While Blue Owl takes on the receivables, PayPal will remain responsible for all customer-facing activities, including underwriting and servicing. Investor enthusiasm for the deal reflects the significant growth in the BNPL sector, which recently saw a 21% year-over-year increase in processed volume.
PayPal is down 22.3% since the beginning of the year, and at $67.00 per share, it is trading 27% below its 52-week high of $91.81 from January 2025. Investors who bought $1,000 worth of PayPal’s shares 5 years ago would now be looking at an investment worth $340.04.
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