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PayPal PYPL recently expanded its digital asset offerings to include Chainlink and Solana on both PayPal and Venmo platforms. This allows users to buy, sell, hold, and transfer these two popular cryptocurrencies within their PayPal and Venmo wallets.

This move supports PayPal’s broader strategy to become a one-stop digital financial hub by integrating crypto, branded checkout, peer-to-peer payments, and consumer finance tools within a unified platform.

These investments are aimed at helping PayPal boost user engagement. In the fourth quarter, the company reported a 2% year-over-year increase in active accounts, reaching 434 million in 2024. Payment transactions grew 5% to 26.33 billion, while Total Payment Volume rose 10% to $1.68 trillion. Transaction margin in dollar terms was up 7%, highlighting the profitability of PayPal’s growing ecosystem.

However, will an expanding crypto portfolio help PYPL shares recover in the near term? PayPal shares have plunged 31.4% year to date, underperforming the broader Zacks Business Services sector and the Zacks Financial Transaction Services Industry’s decline of 9.4% and 7.1%, respectively.

PayPal Holdings, Inc. Price and Consensus

PayPal Holdings, Inc. price-consensus-chart | PayPal Holdings, Inc. Quote

PayPal Faces Near-Term Pressures

PayPal continues to face short-term challenges due to macroeconomic headwinds and its own strategic repositioning. In the fourth quarter of 2024, the company saw slower revenue growth from its Braintree platform as it renegotiated merchant agreements, a move that weighed on the stock performance.

PayPal expects minimal benefit from interest income on customer balances going forward, expected to turn into a headwind for the rest of 2025.

Crypto Footprint Expansion: PayPal is Not Alone

PayPal has also underperformed industry peers that are accelerating crypto adoption to stay relevant in the evolving financial ecosystem, including Mastercard MA, Visa V and global modern card issuing platform Marqeta MQ, over the same timeframe.

While shares of Mastercard and Visa have lost 7.8% and 1.2% year to date, respectively, Marqeta shares have remained flat over the same time period.

Mastercard recently partnered with Ondo Finance to bring tokenized U.S. Treasury assets to its Multi-Token Network. Visa is also advancing its digital asset efforts through its Tokenized Asset Platform, which allows financial institutions to issue fiat-backed tokens and support programmable finance, building on Visa’s decades-long leadership in digital payments. Meanwhile, Marqeta’s card issuing platform helps bring crypto payment solutions to the mainstream through customizable debit and credit cards.

However, unlike peers who mostly rely on third-party partnerships, PayPal is offering native crypto functionality within its own wallets, allowing PayPal greater control over user experience and monetization.

PayPal Provides Positive 2025 Guidance

For the first quarter of 2025, PayPal expects transaction margin dollars to be between $3.6 billion and $3.65 billion, which represents 5% growth at the midpoint. For Fiscal 2025, PayPal projects transaction margin dollars between $15.2 billion and $15.4 billion, representing approximately 4.5% growth at the midpoint.

For first-quarter 2025, PayPal expects to deliver non-GAAP earnings in the range of $1.15-$1.17, reflecting approximately 7% growth at the midpoint.

The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at $1.15 per share. The consensus estimate indicates a year-over-year decline of 17.86%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

For fiscal 2025, PayPal projects non-GAAP earnings in the range of $4.95-$5.10 per share, representing about 8% growth at the midpoint.

The consensus mark for earnings is pegged at $5 per share, suggesting a 7.53% year-over-year increase.

PayPal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Mastercard Incorporated (MA) : Free Stock Analysis Report

Visa Inc. (V) : Free Stock Analysis Report

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Marqeta, Inc. (MQ) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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