QS Research · Michael Burry's Scion Capital analyst template · 2006
PayPal Holdings, Inc. (PYPL)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case +27% · downside -21% · upside +46%
The market is pricing PYPL at 8.0x TTM EV/EBITDA and 10.4x TTM P/E for a business that generated $6.80B TTM EBITDA, $6.30B FCF and a 12.8% FCF yield, which already discounts slow growth. On the TTM to Sep 30, 2026 base, 10x EBITDA gives $68.0B EV less $5.41B net debt = $62.6B equity / 830.66M shares = ~$75, +27%; 6.5x gives ~$47, -21%; 11.4x gives ~$87, +46%. I use a re-rating multiple because the October 2026 guidance raised FY2026 non-GAAP EPS to ~$5.60 and transaction margin dollars to $15.7B, while downside risk is supported by Q3 revenue growth of only 2% and GAAP operating income -8%. That is favorable risk/reward but the base case is below the +30% long threshold, so the call is watch, not long. The missing proof is durable revenue/TM$ acceleration rather than cost cuts and buybacks.
Key numbers
- Share price: $59.24
- Market cap: $49.21B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $34.30B
- EV / EBITDA (TTM): 8.0x
- P/E (TTM): 10.4x
- Price / book: 2.53x
The 15 boxes
- ✓ 1. Long-form business notes
PayPal earns fees mainly on payment volume, plus currency conversion, instant transfers, crypto and value-added/credit/interest revenue; FY2025 scale was $1.79 trillion TPV, 25.4 billion transactions and 439 million active accounts. The FY2020-to-FY2025 XBRL shows revenue rising from $21.45B to $33.17B, operating income from $3.29B to $6.07B and net income to common from $4.20B to $5.23B, while buybacks rose from $1.64B to $6.05B and diluted shares fell from 1,187.00M to 968.00M. The oldest provided text is a regulatory excerpt, not a business overview, so product-mix history before FY2025 is not documented here.
- ✓ 2. Competitive advantage
The sources support real scale and brand claims—439M active accounts, ~200 markets and $1.79T FY2025 TPV—but not a clean durable moat: FY2025 payment transactions fell 4% even as TPV rose 7%, and S25 describes a highly competitive field without naming individual competitors. Management lists a two-sided platform, trusted PayPal/Venmo brands, platform agnosticism, scale, risk/compliance and regulatory licences as strengths; those are assertions, not quantified switching-cost or pricing-power evidence. S28 shows positive operating income every year FY2020-FY2025 and $5.23B FY2025 net income to common, but supplies no margin or return ratios.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue rose 2% to $8.584B (+1% FXN), with TPV +6%, while GAAP operating margin fell 173 bps to 16.3% and non-GAAP operating margin rose 16 bps to 18.8%; GAAP EPS fell 4% to $1.25 and non-GAAP EPS rose 8% to $1.45. Operating cash flow fell 19% to $1.592B, free cash flow fell 17% to $1.431B, and the company returned $1.5B via buybacks while declaring a $0.14 dividend. FY2026 guidance is GAAP EPS ~$5.07 and non-GAAP EPS ~$5.60; the 10-Q risk-factor update centers on cybersecurity.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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