BofA rates PayPal a sell with a $53 target, $7.50 under the $60.50 bid the board turned away
Bank of America resumed PayPal at Underperform, its equivalent of a sell rating, on October 15 with a $53 target, arguing that running the Braintree processing arm apart from the branded checkout button forces a choice between losing merchants and losing margin. The same day brought PayPal's exclusive checkout deal with the AI shopping app Glance and Google's own cart inside Search, opening moves in a fight over whose wallet pays when an AI agent shops.
Vincent Jiang · 3 min read
Bank of America−0.81% — Bank of America, down 0.81 percent today analyst Matthew O'Neill resumed six payments companies on October 15 and gave PayPal−1.15% — PayPal, down 1.15 percent as of its last quote a share of the bottom rating: it and Fiserv+0.49% — Fiserv, up 0.49 percent as of its last quote, the last scaled processor still combining bank and merchant processing, both landed on Underperform, the bank's equivalent of a sell 1. FIS, Global Payments−2.65% — Global Payments, down 2.65 percent as of its last quote and Toast−2.86% — Toast, down 2.86 percent as of its last quote were rated Buy 1. O'Neill calls PayPal cheap at about nine times near-term earnings and still sees "little to slow the erosion" 1.
The same day, PayPal announced the only native checkout inside Glance, an AI shopping app backed by the technology group InMobi and pre-installed on more than 60 million phones and connected TVs 2. Google opened Universal Cart in the US on October 15 too, a cart inside Search and the Gemini app spanning 60 billion product listings, with the payment taken by Google Pay 3.
The floor left with the bidders
Stripe, the payments software group, and Advent International, the private-equity firm, offered $60.50 a share in cash in July, valuing PayPal at about $53 billion on roughly $50 billion of committed bank financing, with Block, the payments group, putting up equity alongside them 4. PayPal's board held out for a higher price, the consortium walked away on August 28, and the shares fell as much as 16% to about $53.74 5. O'Neill's target now sits $7.50 under a floor that no longer exists, for a company worth about $356 billion at its 2021 peak 5.
The trap inside Braintree
Braintree is PayPal's unbranded processing arm, priced low to buy volume; the branded checkout button is where the profit lives. Under Enrique Lores, the former HP−2.75% — HP, down 2.75 percent today chief executive who took over in March, PayPal split into checkout, processing and Venmo, its person-to-person payment app, with separate segment reporting from 2027 6. BofA expects the split to expose Braintree's prices: raise them and merchants may drop the button, hold them and margin keeps leaking 7.
The second quarter showed the shape. Total payment volume rose 10% to $486.4 billion, but transaction margin dollars rose just 1%, the transaction margin rate fell to 44.9%, branded checkout grew 2% and processing volume grew 13% 6. Revenue growth has run between 1.2% and 7.3% in each of the last eight quarters 8.
PayPal's revenue growth has been stuck between 1.2% and 7.3% for two years
Data
| Revenue growth, year over year | |
|---|---|
| Q3 '24 | 5.8% |
| Q4 '24 | 4.2% |
| Q1 '25 | 1.2% |
| Q2 '25 | 5.1% |
| Q3 '25 | 7.3% |
| Q4 '25 | 3.7% |
| Q1 '26 | 7.2% |
| Q2 '26 | 4.8% |
PayPal's profit engine grew 2% while low-margin processing grew 13%
Data
| TPV growth, Q2 2026 | |
|---|---|
| Branded checkout | 2% |
| Braintree processing | 13% |
| Venmo | 14% |
The war the note does not price
The note says nothing about the wallet itself. PayPal holds more than 400 million accounts with stored payment credentials, against about 300 million for Stripe's Link wallet and 250 million for Shopify's−5.15% — Shopify, down 5.15 percent today Shop Pay 9. The company counted 439 million active accounts at the end of June 6.
Link and Shop Pay already handle payments for Meta's−4.06% — Meta, down 4.06 percent today Muse assistant and for Instinct, another AI agent, often by issuing single-use virtual cards that buy on the shopper's behalf and cut the merchant relationship in two 9. Muse launched on September 8 with Link as its wallet; PayPal's partnership was announced on September 22, two weeks later 6. PayPal's counter landed on October 15: exclusive native checkout inside Glance 2, plus a place among the 60-plus partners on Google's−2.90% — Google, down 2.90 percent today agent-payments protocol, while Google Pay takes the actual payment in Universal Cart 3.
PayPal's one edge in agent checkout: the biggest stored-card wallet
Data
| Value | |
|---|---|
| PayPal | 400M |
| Stripe Link | 300M |
| Shopify Shop Pay | 250M |
The second act still needs a number
Terry Angelos, chief strategy officer at payments firm VGS, wrote the "Wallet Wars" essay for a16z, the venture firm's publication, and allows that "perhaps agents can give PayPal a second act because the winning wallet needs not the prettiest checkout" 9. The reach is real. The number is not: neither the Muse deal nor the Glance integration discloses revenue, management expects agentic payments to become meaningful only from 2028, and BofA's erosion is priced in months 6.
What October 27 settles
PayPal reports third-quarter results on October 27, with management's own September guidance pointing to branded checkout growth of 1 to 2 percent 6. Watch one split: whether purchases made through AI agents show up as branded checkout volume, or whether Braintree's cheaper processing keeps growing faster.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
