PayPal's Takeover Drama Masks a Quiet Erosion in Its Core Business
Published on 08/16/2026 at 17:32 | Redaktion boerse-global.de
The numbers tell two very different stories about PayPal right now. On one hand, the stock has climbed nearly 10 percent over the past month on revived takeover speculation. On the other, the company's Honey browser extension is bleeding users and merchant partners at an alarming clip — a reputational wound that risks being overshadowed by the deal chatter.
A Bid Rejected, But Not Forgotten
Negotiations between PayPal, Stripe, and private equity firm Advent International remain active, with media reports suggesting an agreement could materialize in the coming weeks. PayPal itself has declined to comment on the talks.
The initial approach came in July, when Stripe and Advent tabled an offer of $60.50 per share — a proposal that valued the payments giant at roughly $53 billion. PayPal turned it down, but CEO Enrique Lores stopped short of slamming the door shut. During the earnings call roughly three weeks ago, he said the company would evaluate any path that creates "superior value" for shareholders — language widely read as signaling that management believes the current bid undervalues the business.
Since that rejection, PayPal's negotiating position has strengthened. Second-quarter 2026 results, released about three weeks ago, blew past expectations with adjusted earnings per share of $1.38 and net revenue up 5 percent to $8.7 billion. Management subsequently raised its full-year profit forecast to $5.38 per share, a notable reversal from the slight decline previously expected. The stock has added roughly 4 percent since those numbers hit the tape, meaning any revised offer would need to reflect the improved operational picture.
The Honey Problem Nobody Wants to Talk About
While the takeover narrative dominates headlines, a separate crisis is quietly unfolding. PayPal's Honey browser extension has reportedly lost more than seven million Chrome users and 7,000 merchant partners following viral allegations over its "last-click" affiliate commission practices. Content creators have accused the company of siphoning commissions that rightfully belonged to them.
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The legal fallout is already underway: a US federal judge has allowed a second amended class-action lawsuit targeting the practice to proceed. For a company in the middle of sale negotiations, this represents a tangible reputational liability that could complicate due diligence — and potentially influence the final price tag.
Institutional Investors Split Down the Middle
The divergence in how major shareholders are positioning themselves underscores the uncertainty surrounding the deal's outcome. Michael Burry, the investor famous for betting against the housing market, has increased his stake, citing PayPal's appeal to private equity and strategic buyers at current valuation levels.
Others are heading for the exits. Handelsbanken Fonder AB trimmed its position by 12.2 percent during the second quarter, while Chicago Trust Co NA sold off three-quarters of its holdings. Even Chris Natali, a senior vice president at the company, offloaded part of his direct shareholdings in late July. These conflicting signals suggest the market is far from unanimous in pricing the takeover as a done deal.
Adding to the mixed picture, Cantor Fitzgerald raised its price target from $54 to $60 on August 3 — but maintained a neutral rating. Even the more optimistic voices on the Street aren't recommending the stock without reservation.
A Stock Stretched Thin
The technical picture reinforces the sense of a market caught between hope and hesitation. With a relative strength index of 74 and the share price trading 22 percent above its 50-day moving average and 21 percent above its 200-day average, the stock looks technically overbought. Annualized volatility of 54 percent reflects just how jittery trading has become around the deal narrative.
At Friday's close, shares stood at €53.22, up 1.3 percent on the day and 9.9 percent over the past month. That rally has carried the stock far from its 52-week low of €32.42 hit in February, yet it still sits roughly a quarter below the October peak of €70.78. The wide gap between those extremes illustrates how violently the stock has swung between takeover speculation and operational recovery.
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What Happens If the Deal Falls Through?
PayPal is also pursuing its own cost-reduction program, targeting $400 million in gross savings this year and at least $1.5 billion over the next two to three years. Those margin improvements could factor into any revised bid — but they also represent a fallback strategy if the takeover collapses.
A combined PayPal-Stripe entity would process an estimated $3.7 trillion in annual payment volume, a scale that law firm White & Case has already flagged as likely to trigger intense antitrust scrutiny given the concentration of merchant infrastructure and consumer wallets. That regulatory overhang is easy to underestimate when headlines focus on deal timelines rather than legal realities.
For investors, the central question remains how high Stripe and Advent must go to secure PayPal's approval. Until an official confirmation emerges, every price move is essentially a wager on the outcome of the talks. Should the deal stumble on regulatory hurdles or another rejected bid, the operational problems — Honey's decline, the class-action litigation, the upcoming changes to user agreements effective September 14 — would suddenly snap back into focus. The odds of a transaction may outweigh the doubts, but not by enough to justify ignoring the risks embedded in the current valuation.
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