PayPal stock remains 81% below its 2021 peak as of August 12, even as the company keeps posting steady growth in the volume of payments flowing through its network, underscoring a persistent disconnect between the fintech giant's operating metrics and its share price.
PayPal's total payment volume, a closely watched measure of money moving across its platforms, rose 10% year over year in the second quarter, which ended June 30, reaching $486 billion. That figure has climbed every year the company has reported it, according to PayPal's own disclosures cited by the Motley Fool. The company also counts 228 million monthly active users spanning merchants and individual consumers, a base analysts say supports a global network effect that has made PayPal a leading force in digital payments for more than two decades.
Analysts expect PayPal to generate $6 billion in free cash flow in 2026 on $34.7 billion in revenue, projections that on paper describe a healthy, cash-generative business. Yet investors have punished the stock for years, and the gap between PayPal's underlying growth and its depressed valuation has become one of the more puzzling stories in large-cap technology investing.
Why Branded Checkout Has Become the Focus
The clearest explanation lies in the performance of PayPal's online branded checkout business, which includes PayPal-branded checkout, Pay with Venmo, and eBay transactions. This segment has historically been the company's most profitable, and for years it powered PayPal's growth story. Between 2018 and 2021, branded checkout volume grew at a 26% annualized rate, a period that coincided with the stock's run to its all-time high.
That momentum has since evaporated. Branded checkout volume grew just 5% in 2022, and the slowdown has not reversed. In the second quarter of this year, branded checkout volume rose only 2%, even though the segment still accounts for 28% of PayPal's entire total payment volume. By contrast, other parts of the business are growing far faster: Venmo volume surged 14% year over year in the quarter, and the payment service provider line, boosted by contributions from Braintree, grew 13%.
The mismatch matters because branded checkout carries PayPal's best margins. Because that segment is growing so slowly while faster-growing but less profitable segments expand, PayPal's overall revenue rose just 5% last quarter, and transaction margin dollars, a key profitability measure, increased by only 1%. In other words, PayPal is processing more money than ever, but a shrinking share of that volume is coming from the part of the business that actually generates the most profit per dollar processed.
Apple Pay and a Crowded Market
Management has tried to project confidence about the branded checkout slump. On the company's Q2 2026 earnings call, CEO Enrique Lores said PayPal is
