Aman Verjee, a former PayPal finance executive and early employee, said a potential takeover by Stripe marks a critical juncture for the company.

A deal could determine whether PayPal becomes the consumer wallet layer of a broader payments platform or remains a mature payments business struggling to restore the growth and profitability that once defined it.

The proposed offer of USD 60.50 a share would value PayPal at about USD 53bn, or roughly 28% above its unaffected share price. Verjee, now founder of Practical Venture Capital and still a PayPal shareholder through legacy employee holdings, argued that the valuation reflects a market that has become overly pessimistic about PayPal’s prospects.

For much of the past year, PayPal traded in the mid-USD 40s, implying a valuation of roughly six to seven times EBITDA, he said. That compares with materially higher historical multiples for major payments companies.

The discount marks a sharp reversal from the pandemic-era technology boom, when PayPal’s market capitalization surpassed USD 350bn. Verjee agreed that valuation was unsustainable, saying the stock reflected the COVID-19 market bubble more than the underlying business. Still, he believes the subsequent correction went too far.

So does the market. PayPal’s stock has since surged closer to the offer price.

PayPal’s lost growth narrative

Verjee said that PayPal’s main problem has been its failure to capitalize on several major technology trends in fintech since 2020.

PayPal missed the growth of small business payments and the move toward offline merchant-payment tools, where Block became a significant player, Verjee said.

It has also lost market share in its high-margin branded checkout business to strong native mobile competitors like Apple Pay and Shop Pay, he noted. As mobile device integration makes biometric checkout faster than logging into a separate web wallet, PayPal’s branded volume growth has slowed significantly.

It also failed to fully exploit the emergence of cryptocurrency.

With hundreds of millions of consumers and a trusted financial brand, PayPal could have developed into a regulated digital-asset marketplace comparable in some respects to Coinbase, Kraken, or Gemini, he argued.

Instead, the company largely remained on the sidelines as crypto expanded.

Braintree weighs on margins

Braintree, the merchant-processing platform PayPal acquired in 2013, has become another central issue.

Braintree generates nearly half of PayPal’s USD 1.8tn in annual payment volume, but it does so at materially lower margins than its branded checkout business.

Much of that volume occurs behind the scenes, as consumers enter card details on merchant websites without necessarily knowing PayPal technology is powering the transaction. While the platform has helped drive payment volume growth, it has also contributed to margin pressure.

PayPal’s gross margin has fallen from approximately 55% five years ago to about 46% today, Verjee said. During his tenure, Verjee said gross margins were closer to 60%, helped by a stronger mix of branded transactions and lower-cost funding sources.

“The business mix has changed,” he said.

Stripe brings the merchant network

That is where Verjee sees the strategic logic of a Stripe-PayPal combination.

Stripe has built a leading merchant infrastructure business and developed deep relationships with businesses but lacks PayPal’s consumer reach. PayPal, by contrast, has approximately 440m consumer accounts.

A combination would bring together two complementary sides of the payments ecosystem: Stripe’s merchant network and PayPal’s consumer wallet platform.

Verjee believes the combined platform could eventually route some transactions between PayPal wallets and Stripe merchants without relying on traditional card networks. That could reduce reliance on Visa and Mastercard and eliminate roughly 200 basis points of interchange costs, according to Verjee. Those savings could turn relatively low-margin processing revenue into higher-margin profit.

The deal may also accelerate stablecoin adoption.

Stripe has invested heavily in stablecoin infrastructure, including through its acquisition of Bridge in 2025, while PayPal has developed its own dollar-backed stablecoin. Combining Stripe’s infrastructure with PayPal’s consumer network could create a significant global stablecoin payments platform, Verjee said.

PayPal signals it may want more

Whether that strategic case translates into a transaction may depend largely on PayPal’s new leadership team and board.

President and CEO Enrique Lores, who previously led HP, could be well positioned to manage the company through a complicated strategic process, Verjee said. Previous PayPal CEOs, including Scott Thompson, David Marcus, and Dan Schulman, largely came from payments or financial-services backgrounds.

Lores, who took the reins in March, brings experience with shareholder communication, board dynamics, and regulatory processes, Verjee said, pointing to his handling of HP’s restructuring in 2015 and its defense during Xerox’s takeover attempt in 2020.

On PayPal’s 2Q26 earnings call last week, Lores did not directly address Stripe’s offer, saying PayPal does not comment on potential mergers or market speculation. But he left the door open to a transaction if it could create more value than the company’s standalone strategy.

“If we see levers or a path that we believe would create superior value for our shareholders than executing our current strategy, we would, of course, carefully consider them,” Lores told investors.

Citizens analyst Andrew Boone interpreted the comments as signaling openness to a transaction at a higher price, citing PayPal’s customer relationships, Braintree franchise, and expanding financial-services business as support for a richer valuation.

“While PayPal offered boilerplate language, our interpretation is that management believes it can improve the business and wants to be paid for this potential,” Boone wrote in an analyst note published after the earnings call. “Said differently, we believe PayPal wants a higher offer.”

But Stripe may face competing demands for capital. Boone noted that Stripe’s reported USD 10bn offer for OpenRouter could limit its capacity to also court PayPal.

For now, PayPal is pursuing a standalone turnaround under Lores, including a restructuring and a plan to generate at least USD 1.5bn of gross run-rate savings over the next two to three years through cost reductions and artificial intelligence-driven efficiencies.

Lores said PayPal is also on track to remove three organizational layers and is continuing a technology modernization program that includes moving from its data centers to the cloud and building a more modular architecture.

Turnaround gains traction, margins under pressure

PayPal’s 2Q results offered some evidence that the standalone strategy is beginning to gain traction.

Transaction margin dollars increased 1% year over year, while total payment volume rose 10% to USD 486.4bn, according to its earnings statement.

Online branded checkout grew 2%, while payment service provider volume accelerated 13%, driven by Braintree. Buy Now, Pay Later volume increased 26%, and Venmo payment volume rose 14%. Management raised full-year transaction margin guidance to USD 15.6bn, representing approximately 1% annual growth.

Still, profitability remains under pressure. Operating expenses excluding transaction costs increased 9%, driven by inflation pressure and PayPal’s continued investment in financial services, cloud and platform modernization, sales expansion, and risk management.

The strategy is also broadening beyond payments processing. Analysts believe there may be an opportunity worth more than USD 200bn for PayPal to sell additional financial products to its customers. Financial services now accounts for close to 20% of transaction margin and is growing at double-digit rates.

With an M&A premium now reflected in its stock price, Boone maintained a market perform rating following the quarterly results, citing improving business trends, planned cost reductions, and organizational restructuring while warning that the turnaround remains in its early stages.

For shareholders, a central question is whether PayPal’s improving fundamentals justify remaining independent or warrant a higher price from Stripe. The answer may depend less on PayPal’s willingness to sell than on how much Stripe is prepared to pay.