PayPal's Strange Bedfellows: Burry Bets Big as the Company Pivots to Ads

Michael Burry opens 3.5% PayPal stake at $49 amid stock slump, as new ad product and activist chatter emerge ahead of May 5 earnings report.

The numbers tell two very different stories about PayPal right now. On one side, there’s Michael Burry, the “Big Short” investor who just opened a 3.5% position in the stock at $49 a share, arguing the market has mispriced the company due to contagion fears from private credit stress that simply don’t apply. On the other, there’s the operating reality: a stock down roughly 25% over the past year, a core checkout business under pressure, and a management team that has prepped investors for stagnant transaction margins and a mid-single-digit decline in non-GAAP earnings this quarter.

Both narratives converge on May 5, when PayPal reports first-quarter results before the opening bell.

A New Revenue Stream, Built on 25 Billion Transactions

Just days before that earnings release, PayPal rolled out a product that signals where the company wants to go next. On April 27, it launched the PayPal Ads ID, a deterministic advertising identifier built on aggregated, consent-based signals from its Transaction Graph. That graph sits atop 25 billion transactions across more than 400 million accounts, giving advertisers a privacy-compliant, cross-device identifier tied directly to purchase completion.

The early integration partners include Magnite, PubMatic, Rokt, and Taboola. The pitch is straightforward: higher match rates and measurement linked to actual sales, putting PayPal in the same league as Amazon and Walmart, which have long monetized their shopping data for advertisers.

The timing is no accident. With the core branded-checkout business—which contributes more than half of PayPal’s profit—struggling under macroeconomic pressure and sluggish merchant adoption, the company needs a new growth engine. Advertising represents a logical adjacent market, but it’s early days, and the revenue contribution won’t show up in this quarter’s numbers.

Burry’s Bet and the Technical Bounce

Michael Burry’s entry has already moved the stock. According to his newsletter, he built the position at $49, arguing that the selloff in software names was amplified by stress in private credit markets—a dynamic that shouldn’t affect PayPal’s funding structure. The stock has since rallied, recently trading at €42.29 (approximately $46 at current rates) and reclaiming its 50-day moving average of €39.30.

Adding to the speculative froth, regulatory filings from investment bank SG Americas have fueled chatter about a potential activist investor circling the company. That narrative, combined with Burry’s stamp of approval, has given the shares a short-term lift.

But the technical picture only goes so far. The stock remains deeply negative on a one-year view, and the fundamental headwinds haven’t dissipated.

The Operating Reality: Stagnation and Dividends

Wall Street remains cautious. Of 26 analysts covering the stock, 62% rate it a Hold, and only 23% recommend buying. The consensus calls for diluted earnings per share of $1.27 in the first quarter, a 4.5% decline year over year. Revenue is expected to come in around $8 billion, with growth in the low single digits.

Management has already set a low bar. For the full year, transaction margins are expected to stagnate at best. The company is leaning on two shareholder-friendly measures to bridge the gap: a newly initiated quarterly dividend and a multi-billion-dollar share buyback program for 2026.

The branded-checkout business remains the biggest risk. It generates the bulk of PayPal’s profit, but it’s losing momentum as merchants explore cheaper alternatives and consumers shift payment preferences. The new CEO will need to show concrete progress on stabilizing that segment when he delivers the earnings report.

The NFL Deal Adds Visibility, Not Margin

In a separate move to boost consumer engagement, PayPal signed a multi-year partnership with the NFL, becoming the league’s official P2P payment partner. Peer-to-peer volumes across PayPal and Venmo grew 7% in 2025, and the deal should drive app visibility during games.

But the partnership doesn’t address the structural margin compression that has weighed on the stock. Transaction margins and growth trajectory remain the variables that matter most—and those will only be clarified on May 5.

For now, PayPal is a stock caught between a contrarian value thesis and a business in transition. Burry sees a mispricing. The market sees a turnaround that hasn’t materialized yet. The next quarterly report will tip the scales one way or the other.