PayPal stock price jumped to its highest level since July after the fintech giant published strong financial results and announced a plan to reward shareholders using dividends. PYPL reached a high of $79.16, up by 20% from its lowest level this month, and then pulled back to $73 at present.
PayPal Stock Rises After Start of Dividends
PayPal, the parent company of Venmo, Braintree, and its eponymous payment solutions, reported third-quarter results that were better than expected, boosting its forward guidance.
The company reported that its total payment volume increased to $458 billion in the third quarter, up from $443 billion in the second quarter. It was also higher than the $416 million it handled in the same period last year.
This growth happened even as the number of active accounts remained unchanged at 438 million. Monthly active accounts rose to 227 million from 221 million in the same period last year.
As a result, the company’s revenue rose by 7% to $8.47 billion, while its transaction margin rose to $3.87 billion.
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Most importantly, the company now expects to make more money in the current quarter as its business growth continues. Its expectation is that its transaction margin will be between $4.02 billion and $4.12 billion. The CEO said:
“We have returned the company to growth and are on pace for 6% to 7% transaction margin dollar growth in 2025, when excluding interest on customer balances. We are also building for an agentic future, partnering with leaders such as Google, OpenAI, and Perplexity.”
PayPal to Start Paying Dividends
Another important aspect of its earnings report is that the company will begin paying a quarterly dividend this year.
It will start with a payout ratio of 10%, a move that will complement its share buyback, which has reduced its outstanding shares from 1.17 billion in 2021 to 960 million today. It spent $1.5 billion in the last quarter on repurchases, bridging the 12-month figure to $5.7 billion.
By initiating its buyback, PayPal is indirectly acknowledging that it is no longer a growth company, as it was a few years ago. It is, instead, a value company, as evidenced by its low price-to-earnings multiple.
PayPal’s earnings results came as the company’s stablecoin, PYUSD, has become one of the fastest-growing players in the industry. It now has a market capitalization of over $2.7 billion, significantly higher than it was a few months ago. This growth is likely because of its Pay With Crypto solution.
However, while PayPal’s own stablecoin has grown rapidly, analysts warn that the broader adoption of stablecoins could challenge PayPal’s traditional payment model. That’s because PayPal’s standard transactions can cost merchants up to 3% in fees, whereas stablecoin transfers on some blockchains can be nearly free. If consumers and merchants shift toward decentralized payment methods, PayPal may need to adapt its business model to maintain profitability.
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