The equity research team at BTIG has expressed cautious optimism about PayPal’s stock, following the company’s report of a third-quarter earnings beat and a significant partnership with the AI startup OpenAI. Despite a surge of over 14% in PayPal’s shares during early trading after these announcements, the stock is now experiencing a decline, mainly due to concerns surrounding consumer spending.
The collaboration with OpenAI is particularly noteworthy, as it will allow PayPal’s payment solutions to be integrated into the widely-used ChatGPT AI chatbot by next year. This integration aims to enable customers to make purchases directly within the ChatGPT platform, potentially streamlining the payment process for users. However, Andrew Harte, an analyst at BTIG, commented that while the partnership is being viewed positively, it is unlikely that PayPal will serve as the exclusive payment method for ChatGPT. Consumers are expected to have access to multiple payment options, which raises caution about PayPal’s long-term position in this partnership.
Harte acknowledged that the collaboration with OpenAI could bring more immediate revenue opportunities for PayPal, but he expressed that there are still significant reasons for caution regarding the stock. BTIG recently reassessed its outlook for PayPal’s revenue growth, projecting that while there is an incremental improvement expected by fiscal year 2027, challenges remain in the upcoming quarters. The firm raised its gross profit expectations for PayPal by 0.5% for fiscal year 2026 and adjusted its earnings per share (EPS) expectations upward by 3.4% in light of the company’s latest earnings report.
One major point of concern highlighted by BTIG is the projected slower revenue growth for PayPal in the coming year, due in part to last year’s unusually strong performance. Increased investments by the company are anticipated to negatively impact profit growth moving forward. This led Harte to maintain a Neutral/Hold rating on PayPal’s stock. Analysts are particularly worried about PayPal’s ability to enhance growth in its Branded Checkout segment, which includes PayPal, PayPal Pay Later, and Venmo, amid intensifying competition in the online payment landscape.
Overall, evaluations on Wall Street indicate a Hold rating on PayPal shares. Current data from TipRanks indicates a consensus of 10 Buy, 15 Hold, and three Sell recommendations among 28 analysts surveyed over the past three months. The average price target for PayPal stock stands at $80.60, suggesting a potential upside of approximately 7% from its current trading level.
