PayPal Faces Analyst Skepticism Amid Strategic Pivot

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Wall Street analysts are expressing growing caution toward PayPal, despite the payments giant's efforts to diversify its business and regain investor confidence. A series of downgrades and price target cuts this week overshadowed the company's presentation of an innovative advertising platform at CES 2026.

The skepticism from major institutions was pronounced. On Tuesday, Goldman Sachs reaffirmed its "Sell" rating while reducing its price target for PayPal shares from $72 to $65. Analysts at the firm see limited near-term potential for the payment processor.

In a similar move, the research firm Monness Crespi Hardt downgraded the stock from "Buy" to "Neutral." Experts cited persistently high market expectations for 2026 as a key reason. Underlying the caution are significant macroeconomic worries, particularly concerning weakening consumer purchasing power in the United States. Analysts note that 90% of consumers responsible for half of all spending are facing increasing financial pressure, a factor that could hinder the company's recovery.

A New Advertising Venture Meets a Cautious Market

In contrast to the negative analyst sentiment, PayPal used the CES 2026 stage to launch a strategic offensive. The company introduced its "Transaction Graph Insights & Measurement" program, aiming to secure a position in the lucrative digital advertising market. PayPal's central proposition is its access to verified transaction data from 430 million consumer accounts and millions of merchants.

Mark Grether, who leads PayPal Ads, highlighted the platform's competitive edge, stating it relies on actual purchase data rather than modeled estimates. This allows advertisers to precisely measure which campaigns directly drive sales. Early tests with partners, such as Ulta Beauty, reportedly showed promise, with the cosmetics retailer recording a 20% increase in transaction spend.

Structural Challenges and a Depressed Valuation

The market is currently pricing in these risks. PayPal's stock is trading at a price-to-earnings (P/E) ratio of approximately 11.9, significantly below the S&P 500 average of about 23.9. This valuation gap is reflected in the share price performance: the stock has lost roughly 30% of its value over the past year and, at a current price of $59.81, remains close to its 52-week low.

Concerns extend beyond cyclical factors. Back in December, Morgan Stanley slashed its price target to $51, warning of structural issues. These include market share erosion for PayPal's traditional checkout button and intensifying competition from rivals like Stripe and Adyen.

Forthcoming Earnings to Test the Strategy

The next critical milestone arrives on February 3, 2026, when PayPal is scheduled to release its fourth-quarter 2025 results. Market experts anticipate earnings per share of $1.29. This report will serve as a key test, indicating whether the strategic initiatives spearheaded by CEO Alex Chriss—ranging from AI partnerships to the new advertising platform—are potent enough to counterbalance macroeconomic headwinds and competitive pressures.