PayPal shares came under renewed selling pressure on Oct. 27 after the payments company reported a sharp slowdown in third-quarter revenue growth, according to its third-quarter earnings release. Revenue rose just 2% to $8.58 billion, falling short of Wall Street expectations. Adjusted earnings of $1.45 per share beat estimates, however, and management raised its full-year profit forecast.

The company also continued its share repurchase program amid mounting questions about the pace of its business recovery, disclosing $6 billion in buybacks over the past 12 months and declaring another $0.14 per-share quarterly dividend.

Revenue and Profitability Growth Have Stalled

PYPL stock dropped to $54.90 as investors reacted to the earnings report, which showed the company's core business remained under pressure. The results underscore the view that a firm that once dominated the fintech industry has become a "fallen angel" — a once high-flying company that has lost momentum.

Active accounts were unchanged at 439 million, with Venmo — the peer-to-peer payments app PayPal acquired in 2013 — the only business still growing. Monthly active customers also held steady, at 228 million, while the number of payment transactions rose 7%. With the account base flat, that transaction growth reflects heavier use among existing customers rather than an influx of new users.

Total payment volume came to $487 billion, up 6% year over year, the slowest pace since the fourth quarter of last year. That translated into revenue growth of just 2%, a rate well below that of payments rivals such as Visa and Mastercard.

Looking ahead, the company said it expects revenue growth to remain under pressure in the final quarter of the year. Management guided to fourth-quarter earnings per share of $1.37, bringing the full-year figure to $5.07 — the benchmarks the company's year-end report will be measured against.

The slowdown extends to some of PayPal's newer products as well. Data show that PayPal USD (PYUSD), the company's stablecoin launched in 2023, has seen its market capitalization — the value of tokens in circulation — slip to $3 billion from a record high of over $4.2 billion.

Buybacks and Dividends Take Center Stage

With organic growth slowing, PayPal's management has turned to capital returns to support the share price. In a statement, the company said it returned $1.5 billion to shareholders through buybacks, taking repurchases over the past 12 months to $6 billion — a notable milestone for a company valued at more than $50 billion.

The ongoing buyback push has steadily reduced PayPal's outstanding share count, from 1.16 billion in 2022 to 862 million — a reduction of roughly a quarter. Repurchases support earnings per share by shrinking the number of shares outstanding.

PayPal also continued paying dividends, declaring a $0.14 per-share quarterly payout. In addition, the company holds more than $15.1 billion in cash and equivalents, a substantial cushion for a company of its size.

Those figures, together with a cheap valuation, help explain why the company recently attracted a takeover bid from Stripe and Advent International. The approach fell apart after PayPal maintained that its business was worth more than the offer.

Technical Picture

The daily chart shows PYPL bottomed at $38.52 earlier this year and then bounced back after Stripe and Advent revealed their takeover bid. It rebounded to a high of $62.60 in August before retreating after the two firms ended their pursuit. The stock then traded in a narrow range and dropped to $53.81 following the earnings release.

That retreat has pushed the stock below its 50-day moving average, while the Coppock Curve, a momentum indicator used to signal long-term trend changes, has moved sideways. Near term, the chart points to continued pressure, with sellers targeting the key support level of $50. A drop below $50 would signal further downside, potentially reaching the psychological level of $45.

This article provides information, not financial advice. Stock investments carry volatility and potential losses. Readers should conduct independent research before investing.