Economic Uncertainty Weighs on PayPal

Here's our initial take on PayPal's (NASDAQ: PYPL) fiscal 2025 first-quarter financial report.

Key Metrics

PayPal's Turnaround Is Progressing Nicely

PayPal posted generally strong numbers in the first quarter. Total payment volume increased by 4% year over year to more than $417 billion, and revenue slightly increased as well. Thanks to efficiency improvements throughout the business and generally strong profitability, PayPal's adjusted earnings soared by 23% year over year. And although PayPal's active account growth of 2% might not sound too impressive, consider that a year ago, the company reported a year-over-year decline.

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 »

In addition, PayPal's business grew in some of the key ways management aims to use as long-term revenue drivers. For example, Venmo revenue growth accelerated to 20% during the quarter, and debit card payment volume increased by more than 60%.

PayPal maintained its full-year guidance for earnings and transaction margin and reaffirmed its expectation of $6 billion to $7 billion of free cash flow and about $6 billion in share buybacks (of which $1.5 billion was completed in the first quarter).

Immediate Market Reaction

Although PayPal beat expectations on the bottom line, revenue was slightly below the analyst consensus, as you can see from the table above. When combined with the economic uncertainty surrounding PayPal's business for the rest of 2025 (more on that in a bit), the stock is down a bit after the report.

As of 8:20 a.m. EDT, PayPal was down by about 3.5% -- not a massive decline but it shows that investors aren't exactly blown away by the company's numbers.

What to Watch

PayPal's results for the rest of 2025 will largely depend on the health of the global economy. Management even suggested that it would have increased full-year guidance due to a strong start to the year, but left it alone due to economic uncertainty.

So while it's obviously important for investors to keep track of the company's turnaround initiatives and how they're working out, it's also important to watch consumer spending trends. After all, PayPal can make all of the innovative improvements it wants, but if consumers aren't spending money, the numbers aren't going to look great.

Helpful Resources

• Full earnings report
• Investor relations page
• Additional coverage: 1 Reason to Buy PayPal Today

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 $598,818!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $666,416!*

Now, it’s worth noting Stock Advisor’s total average return is 872% — a market-crushing outperformance compared to 160% 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 April 28, 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 June 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.