PayPal: Quietly Becoming a Stealth Compounding Machine

PayPal ($PYPL) has been one of the most beaten-down names in fintech over the last couple of years, but under the surface, the fundamentals are quietly getting stronger. The combination of growing Total Payment Volume (TPV) and aggressive buybacks makes the setup far more attractive than the market is pricing in.

TPV Growth Shows Real Underlying Demand

Last quarter, PayPal’s TPV climbed roughly 6% year-over-year, crossing $440B. That number isn’t just a headline figure — it tells us people are spending more through PayPal and Venmo. What’s even better is that higher-value transactions are driving much of that growth, meaning PayPal isn’t just chasing low-margin volume for the sake of growth.

More TPV means more revenue to spread over a relatively fixed cost base, and that’s where operating leverage starts to kick in.

Buybacks Are the Quiet Multiplier

While the business continues to scale, PayPal is also putting its cash flow to work by buying back stock — a lot of it. Roughly $1.5B worth of shares were repurchased last quarter alone, with a $6B buyback plan for the full year.

In the past 12 months, PayPal has retired about 7% of its total share count. That means every remaining share now represents a bigger piece of the company’s earnings. Even if growth stays steady, EPS can climb simply because there are fewer shares outstanding.

This is where investors often underestimate PayPal — buybacks are a hidden growth engine. Layer on potential margin expansion, and you have a setup where earnings can grow double digits without heroic assumptions.

The Bullish Setup

PayPal is not a hypergrowth story anymore, but it doesn’t need to be. The combination of:

• Consistent TPV growth

• Expanding operating leverage

• Aggressive buybacks

…creates a foundation for steady compounding. At today’s valuation, the market is barely pricing in growth at all — which leaves room for multiple expansion if the company continues to execute.

Final Thoughts

PayPal may never get back to its peak hype days, but it doesn’t have to. If management keeps growing TPV and aggressively shrinking the float, shareholders could see outsized returns over the next few years.

One More Thing

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Disclosure:

This article is for informational and educational purposes only and should not be considered financial advice. The views expressed are my own and are based on publicly available information believed to be reliable at the time of writing. Always do your own research and consider your individual risk tolerance before making any investment decisions. I may hold positions in some of the securities mentioned.