Copyright investors
PayPal Holdings (PYPL) on Tuesday reported third quarter earnings and revenue that topped Wall Street estimates. PayPal stock initially surged, then pared gains as analysts mulled a new OpenAI e-commerce partnership and key financial metrics for its branded business. The digital payments firm reported September-quarter earnings before the market open. PayPal earnings for Q3 rose 12% to $1.34 per share on an adjusted basis. Revenue climbed 7% to $8.42 billion. Also, Venmo Q3 revenue rose 20%. Analysts expected PayPal earnings of $1.20 a share on revenue of $8.236 billion. On the stock market today, PayPal stock vaulted nearly 16% in early trading. Shares rose 3.9% to close at 73. Heading into the PayPal earnings report, shares were down 17% in 2025. OpenAI Partnership In addition to reporting PayPal earnings, the company announced its first shareholder dividend. PayPal has targeted a payout ratio of 10% of adjusted net income. Also, PayPal announced an e-commerce partnership with ChatGPT builder OpenAI. Under the OpenAI partnership, ChatGPT users buy will be able to complete purchases instantly using a PayPal wallet. ChatGPT has more than 800 million weekly users. PayPal forged a similar deal recently with Google (GOOGL). Truist Securities analyst Matthew Coad in a report said investors should be cautious. "The most likely outcome here is that these AI platforms will make all payment options available for consumers," Coad said. "Meaning that success of agentic commerce potentially will result in accelerating share gains for e-commerce as a whole but not solve PayPal's market share loss issues within e-commerce, in our opinion." Analysts continue to focus on PayPal's branded business — its online checkout button and digital wallet — amid worries over lost checkout market share to Apple (AAPL). Branded checkout growth came in at 5%, in line with estimates. Evercore ISI analyst Adam Frisch in a report said the OpenAI partnership could give PayPal a much-needed boost. "Continued growth challenges for branded checkout have been well documented," he said. "Agentic commerce is seen by some as a potential 'silver bullet' to leverage PayPal's large and global user base and reignite growth on what could be a next-gen commerce platform. Similar to the Perplexity announcement a few months ago, the release today about PayPal being enabled on ChatGPT is certainly a positive development and understandably driving shares higher, but the key questions to address are when, how, and how much incremental volumes can result from these agreements." PayPal Stock: Key Metrics In Q3, total payment volume (TPV) processed from merchant customers climbed 8% to $458 billion versus estimates of $447.5 billion, according to Visible Alpha. Branded TPV is tied to the online PayPal checkout button that many consumers use when shopping online. The company's new definition of branded volume now includes Pay with Venmo. Another key financial metric, transaction margin dollars, rose 6% to $3.87 billion versus estimates of $3.78 billion. For PayPal, transaction margin dollars represent the profit it makes from each individual payment transaction it processes, after accounting for the direct costs associated with that transaction, such as fee payments to credit card networks. Active Users Grow In Q3, active PayPal accounts increased 1% to 438 million. PayPal repurchased $1.5 billion of its own stock in the quarter. For the current quarter ending in December, PayPal said it expected adjusted EPS in a range of $1.27 to $1.31. At the midpoint, the profit guidance came in just below FactSet estimates of $1.31. Repricing initiatives last year at subsidiary Braintree have pressured revenue growth as well as payment volumes but improved transaction margins. Venmo, a person-to-person money transfer service, has expanded into debit cards and other areas. PayPal Stock Technical Ratings San Jose, Calif.-based PayPal has evolved from an online checkout option to a mobile shopping and person-to-person payments app. Further, PYPL stock holds an IBD Composite Rating of only 46 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better. Also, PYPL stock has an Accumulation/Distribution Rating of D-plus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling. The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying, E means heavy selling. Think of the C grade as neutral. Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing. YOU MAY ALSO LIKE
