PayPal cashes out

Will PayPal accept the unsolicited $53 billion Venmo payment it just received?

That’s how much private equity firm Advent International and privately owned fintech platform Stripe offered to buy the payment platform for, pushing shares of PayPal 17.2% higher today.

The deets: Advent and Stripe are reportedly offering $60.50 per share, according to the Wall Street Journal, or a 28% premium above where shares of PayPal closed yesterday. If the deal goes through, Stripe and Advent would hold equal stakes.

Taking over PayPal would help Stripe—already a dominant player in the B2B payment business—break into the consumer market. PayPal, which owns Venmo, processes roughly $2 trillion in payment volumes per year and boasts roughly 439 million accounts, compared to Stripe’s 250 million accounts, according to the WSJ.

PayPal’s perilous position

PayPal was one of the big winners to emerge from the pandemic, becoming a favorite for investors playing the boom in online shopping. But interest rates rose in 2022, contributing to a harsh course-correction for many high-flying tech stocks. PayPal couldn’t quite stick the landing, thanks to stagnating user growth and fierce competition in the payment space.

Shares have meandered lower ever since, and were down 19% this year through yesterday’s close. Most analysts are lukewarm about its future: According to the WSJ, the consensus rating among analysts covering PayPal is a “Hold,” and its median price target is $47 per share.

However, one notable PayPal bull is famed Big Short investor Michael Burry, who said today’s $53 billion offer is “simply too low.” “PayPal is one of the cheapest quality businesses in the portfolio,” he wrote, before stating that he’s not selling his stake in the company after today’s pop.

The fintechs are consolidating: Last week, the WSJ reported that US banks were looking into buying Fiserv’s debit-card network in an effort to avoid federal debit-card fee caps.

Soon it might not matter if you use PayPal, Venmo, Zelle, or something else entirely: You may see different logos, but behind the curtain, there might be fewer companies operating all those payment platforms.—LB