Should You Buy, Sell, or Hold PayPal Stock?

PayPal Holdings (NASDAQ: PYPL) has long been one of the leaders in the payments industry. It's a scaled platform, with 439 million active accounts and $464 billion in total payment volume (TPV) during the first quarter.

But this fintech stock has tanked 24% in 2026 (as of May 21), while the broader S&P 500 index is up 9%. And it trades a gut-wrenching 86% below its record from July 2021, as investors grapple with what is now a slower-growth business.

Should you buy, sell, or hold PayPal stock?

Image source: PayPal.

Financial performance has started to weaken

Since PayPal reported its financial results for Q1 on May 5 before the market opened, shares have dipped 12%. The market might not be happy with 2% TPV growth in Q1 for online branded checkout. This is a critical segment for PayPal, as it helps to differentiate the company from competitors and can be more profitable than other parts of the business.

The first quarter's results come after a disappointing showing for the last three months of 2025, when online branded checkout posted just 1% growth.

And speaking of earnings, they have come under pressure. CEO Enrique Lores, who took over from Alex Chriss on March 1, will focus on heavy investments to bolster PayPal's technological infrastructure. The company's adjusted operating margin was 18.4% in the first quarter, down from 20.7% in the year-ago period.

Adjusted operating income fell 5% year over year to $1.5 billion. The leadership team expects adjusted earnings per share to decline 9% in the current quarter.

Here's what investors should do with this fintech stock

PayPal's valuation has become extremely difficult to overlook. Investors have the opportunity right now to buy shares at a forward price-to-earnings ratio of 8.4. This is at a time when the S&P 500 index trades at a multiple of 22.2. From a relative perspective, PayPal looks like an absolute bargain.

This business has a network effect, thanks to its two-sided ecosystem consisting of merchants and consumers. And it generates positive free cash flow.

But I don't think the stock is a smart buy today. While it pioneered digital payments, PayPal is operating in what has become an intensely competitive industry with compelling offerings from rivals that cater to both merchants and consumers. The company's slower growth and weaker margins point to a new reality.

For existing shareholders, I view the stock as a hold. Because of the cheap valuation, the downside appears to be protected, so investors who are sitting on huge losses might simply choose to remain patient. And unless you need to free up liquidity for another buying opportunity, it's not necessarily a good idea to sell.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short June 2026 $50 calls on PayPal. The Motley Fool has a disclosure policy.