1 Reason PayPal (PYPL) Is 1 of the Best Financial Stocks You Can Buy Today

Key Points

• PayPal has a massively profitable business and steady cash flow.

• There are a lot of growth initiatives underway that could reinvigorate earnings growth.

• The risk-reward dynamics at the current valuation make a lot of sense.

• 10 stocks we like better than PayPal ›

After a couple of years of rapid growth during the COVID-19 pandemic, PayPal (NASDAQ: PYPL) ran out of steam as the world returned to normalcy. And its stock fell sharply. Even now, PayPal is 78% below its all-time high, which it reached in 2021.

However, PayPal's new leadership team has done a great job of focusing on efficiency and returning the business to a decent level of growth. In the second quarter, PayPal's total payment volume grew 6% year over year, revenue grew 5%, and thanks to efficiency improvements, adjusted earnings per share (EPS) grew by 18%.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Lots of future potential

While the recent growth has been modest, there's a lot going on behind the scenes. Earlier this year, PayPal's leaders shared their future vision, and to name just a few highlights:

• PayPal sees a massive opportunity to monetize Venmo better, and this is already taking shape, as Venmo's revenue is now growing at a 20% rate.
• PayPal has a tremendous amount of consumer data and is leveraging this to build an advertising platform.
• The company ultimately wants to combine all its platforms (PayPal, Venmo, Braintree, etc.) into one.
• In-store payments are a massive growth opportunity and a priority for management. PayPal currently has less than 1% of this market, and it's a $200 billion annual revenue opportunity.

These are just a few of the ways PayPal's management believes it can accelerate growth and produce a 20% annual earnings growth rate in the not-too-distant future.

In the meantime, however, the stock is priced for virtually no expected growth. PayPal expects $6 billion to $7 billion in free cash flow (FCF) this year, which means the stock trades for just 10 times FCF.

The bottom line is that if PayPal can deliver on its growth ambitions, it could be a massive success for investors who buy at these levels. If not, it's still a highly profitable industry leader that generates tons of cash.

Should you invest $1,000 in PayPal right now?

Before you buy stock in PayPal, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PayPal wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,657!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,090,993!*

Now, it’s worth noting Stock Advisor’s total average return is 1,057% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 18, 2025

Matt Frankel has positions in PayPal. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.