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.
PayPal Stock Rises After Start of Dividends
PayPal, the parent company of Venmo, Braintree, and its eponymous payment solution, reported third-quarter results that were better than expected and boosted its forward guidance.
The company said that its total payment volume jumped to $458 billion in the third quarter 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
The other important aspect in its earnings report is that the company will start 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 starting to pay its buyback, PayPal is indirectly admitting 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 results came as the company’s stablecoin, PYUSD, has become one of the fastest-growing players in the industry. It now has over $2.7 billion market capitalization, much higher than where it was a few months ago. This growth is likely because of its Pay With Crypto solution.
Analysts believe that PayPal’s business faces the risk of the ongoing stablecoin growth because of its fees, which cost as much as 3% per transaction. Stablecoins, on the other hand, cost almost nothing, depending on the blockchain used.
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