--- title: "BofA rates PayPal a sell with a $53 target, $7.50 under the $60.50 bid the board turned away" description: "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." publisher: "The Inference" section: "Markets" published: 2026-10-16T21:14:32.396Z modified: 2026-10-16T21:14:32.396Z canonical: https://theinference.org/article/bofa-rates-paypal-a-sell-with-a-53-target-7-50-under-the-60-50-bid-the-board-turned-away language: en keywords: "Markets, Payments, Wall Street, AI, E-commerce" --- # 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. [Bank of America](https://theinference.org/markets/companies/bank-of-america) analyst Matthew O'Neill [resumed six payments companies on October 15](https://finance.yahoo.com/markets/stocks/articles/bofa-restarts-payments-coverage-backs-134256928.html) and gave [PayPal](https://theinference.org/markets/companies/paypal) a share of the bottom rating: it and [Fiserv](https://theinference.org/markets/companies/fiserv), 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](https://theinference.org/markets/companies/global-payments) and [Toast](https://theinference.org/markets/companies/toast) 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](https://finance.yahoo.com/technology/ai/articles/glance-paypal-bring-ai-powered-150200338.html), 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](https://thenextweb.com/news/google-universal-cart-us-only-eu) 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](https://theinference.org/markets/companies/stripe), the payments software group, and Advent International, the private-equity firm, [offered $60.50 a share in cash in July](https://www.cnbc.com/2026/07/15/stripe-advent-offer-to-buy-paypal-for-more-than-53-billion-reuters.html), valuing PayPal at about $53 billion on roughly $50 billion of committed bank financing, with [Block](https://theinference.org/article/block-s-square-prices-its-ai-kiosk-at-1-999-plus-99-a-month-as-toast-falls-3-37), 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%](https://www.forbes.com/sites/fionariley/2026/08/28/paypal-plunges-15-after-reports-that-advent-stripe-abandon-53-billion-bid/) 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](https://theinference.org/markets/people/enrique-lores), the former [HP](https://theinference.org/markets/companies/hp) 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](https://admiralmarkets.com/education/articles/shares/paypal-stock-forecast). 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]. *Chart: **PayPal's revenue growth has been stuck between 1.2% and 7.3% for two years** Line chart of PayPal's year-over-year revenue growth for the eight quarters from Q3 2024 to Q2 2026, fluctuating between 1.2% and 7.3%* *Year-over-year revenue growth by quarter, percent. Source: PayPal quarterly figures from its SEC filings, retrieved 16 October 2026. [8]* *Chart: **PayPal's profit engine grew 2% while low-margin processing grew 13%** Column chart comparing year-over-year payment volume growth of PayPal's three business lines in Q2 2026: branded checkout 2%, Braintree processing 13%, Venmo 14%* *Year-over-year total payment volume growth by business line, Q2 2026, percent. Source: PayPal Q2 2026 results release, compiled by Admirals, October 1, 2026. [6]* ## 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](https://www.a16z.news/p/wallet-wars), against about 300 million for Stripe's Link wallet and 250 million for [Shopify](https://theinference.org/markets/companies/shopify)'s 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](https://theinference.org/markets/companies/meta)'s 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](https://theinference.org/markets/companies/alphabet)'s agent-payments protocol, while Google Pay takes the actual payment in Universal Cart [3]. *Chart: **PayPal's one edge in agent checkout: the biggest stored-card wallet** Bar chart ranking wallets by stored-credential reach: PayPal 400 million, Stripe Link 300 million, Shopify Shop Pay 250 million* *Users with payment credentials stored, millions; PayPal counted as 400 million-plus. Source: Terry Angelos, Wallet Wars, a16z.news, October 2026. [9]* ## The second act still needs a number Terry Angelos, chief strategy officer at payments firm VGS, wrote the "Wallet Wars" essay for [a16z](https://theinference.org/markets/companies/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. ## Takeaway BofA's sell rating prices the Braintree margin squeeze, not the wallet war: the real test of whether AI-agent shopping rescues PayPal comes on the October 27 earnings call. ## Sources 1. [Investing.com via Yahoo Finance, "BofA restarts payments coverage, backs FIS, Global Payments and Toast", 15 October 2026](https://finance.yahoo.com/markets/stocks/articles/bofa-restarts-payments-coverage-backs-134256928.html) 2. [Business Wire via Yahoo Finance, "Glance and PayPal Bring AI-Powered Shopping and Checkout to Tens of Millions of U.S. Consumers", 15 October 2026](https://finance.yahoo.com/technology/ai/articles/glance-paypal-bring-ai-powered-150200338.html) 3. [The Next Web, "Google launches Universal Cart in the US, with checkout built into Search and the Gemini app", 16 October 2026](https://thenextweb.com/news/google-universal-cart-us-only-eu) 4. [CNBC, "Stripe, Advent make $53 billion takeover offer for PayPal, sending stock soaring", 15 July 2026](https://www.cnbc.com/2026/07/15/stripe-advent-offer-to-buy-paypal-for-more-than-53-billion-reuters.html) 5. [Forbes, "PayPal Plunges 15% After Reports That Advent, Stripe Abandon $53 Billion Bid", 28 August 2026](https://www.forbes.com/sites/fionariley/2026/08/28/paypal-plunges-15-after-reports-that-advent-stripe-abandon-53-billion-bid/) 6. [Admirals, "PayPal Stock Forecast 2026: PYPL Outlook Ahead of Q3 Earnings", 1 October 2026](https://admiralmarkets.com/education/articles/shares/paypal-stock-forecast) 7. [GuruFocus via TradingView, "BofA Just Delivered Bad News for PayPal Stock Fans", 15 October 2026](https://www.tradingview.com/news/gurufocus:1a88d8fc6094b:0-bofa-just-delivered-bad-news-for-paypal-stock-fans/) 8. [PayPal, quarterly figures from its SEC filings, retrieved 16 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001633917) 9. [Terry Angelos, "Wallet Wars", a16z.news, 15 October 2026](https://www.a16z.news/p/wallet-wars) --- BofA rates PayPal a sell with a $53 target, $7.50 under the $60.50 bid the board turned away — The Inference. Canonical: https://theinference.org/article/bofa-rates-paypal-a-sell-with-a-53-target-7-50-under-the-60-50-bid-the-board-turned-away