PayPal Takeover Bid Tests Its Turnaround

PayPal spent much of the past year looking like a company the market had quietly stopped believing in. That changed on July 15, when the stock surged 17% after Stripe and Advent International submitted a $60.50 per share takeover proposal, valuing PayPal at more than $53 billion.

The offer represents roughly a 28% premium to PayPal’s previous closing price and is backed by around $50 billion in committed bank financing. The strategic logic is easy to understand: Stripe gains the consumer brand it has never owned, while PayPal gains a potential path into a larger digital payments ecosystem.

The harder part is the price. Whether $60.50 represents fair value or leaves more upside on the table will depend on what happens next.

None of this is final. PayPal, Stripe, and Advent declined to comment when the offer became public, and PayPal has not responded to the proposal. The bid also follows an earlier reproach made privately in April, suggesting this is the latest stage of a discussion that has been developing for months.

PayPal’s Turnaround Under New Leadership

The company recently replaced CEO Alex Chriss after a period of disappointing guidance. HP executive Enrique Lores was brought in as president and CEO. The person now evaluating the proposal is not the same executive team that created the strategy Wall Street became increasingly sceptical of.

That does not guarantee PayPal accepts the offer. One analyst cited by Reuters suggested the new CEO may view the proposal as too low.

“We do not think PayPal’s new CEO will likely embrace what could be viewed as a low-ball offer. If the current offer is an opening salvo, we could see Stripe and Advent go as high at $70 per share.” – William Blair analyst Andrew Jeffrey

However, the leadership change does create a different decision-making environment, as Lores is not defending a turnaround plan he originally built.

Why Stripe wants PayPal

Stripe’s interest in PayPal is based on a simple gap: it has built the merchant infrastructure, but not the consumer relationship.

Stripe powers payments behind thousands of online businesses, but most customers rarely see the Stripe name during checkout.

PayPal and Venmo operate differently. They are consumer-facing brands that people recognise and actively choose when making payments.

Buying PayPal would give Stripe both sides of the transaction:

The combination would allow Stripe to move from powering payments in the background to owning a direct consumer payment relationship.

Stripe’s digital payments push

Stripe’s interest in PayPal also fits into its broader push to expand digital payments infrastructure.

Stripe already owns Bridge, which provides stablecoin infrastructure for businesses, including cross-border payments and compliance solutions. What it lacks is a large consumer-facing network where those payment tools can reach everyday users.

PayPal’s PYUSD fills that gap. The company has already built a regulated consumer stablecoin product, with around $2.8 billion in circulation.

Combining Stripe’s merchant network with PayPal’s consumer wallet would connect both sides of the payments chain: businesses that need faster settlement infrastructure and users who already interact with digital payment products.

Owning the customer relationship

The bigger strategic advantage may be less about crypto itself and more about ownership of the customer relationship.

Stripe has historically operated behind the scenes, powering payments for merchants without building a consumer-facing brand. Its partnership with Crypto.com, which allows Crypto.com Pay to operate across Stripe-powered merchants, shows that Stripe is already exploring ways to participate more directly in consumer payments.

But partnerships have limits; Stripe does not own the customer relationship. Acquiring PayPal would change that. Instead of helping another platform reach consumers, Stripe would own the consumer payment network itself.

Advent makes that strategy possible.

While Stripe provides the strategic rationale, Advent brings the financing capacity and private-equity experience needed to execute a transaction of this size. Its role is less about shaping Stripe’s payments vision and more about helping manage PayPal through a potential transition as a private company.

That combination is what makes the deal structure work: Stripe gains the consumer payments platform it lacks, while Advent provides capital and operational support to reshape the business after acquisition.

What happens next for PayPal

The offer is just the beginning. PayPal’s board is expected to meet as soon as July 20 to discuss the proposal, but that meeting should not be viewed as a final decision. For an unsolicited takeover offer of this size, the first step is usually formal evaluation, with lawyers and bankers becoming involved before any serious negotiations begin.

The offer price may not be final. One William Blair analyst told Reuters that if the current proposal is only an opening move, Stripe and Advent could potentially move towards $70 per share. That remains speculation, but stronger earnings could strengthen the case for a higher bid.

The buyer group is also more complicated than the first headlines suggested. Reuters initially reported Stripe and Advent as joint buyers, while CNBC later reported that Block could join the group, with the three companies contributing $17 billion in equity financing.

That means the deal structure may continue to evolve rather than remain a simple Stripe-Advent transaction.

The Earnings test

PayPal also faces a different shareholder calculation.

In the same month, eight days later, PayPal’s second-quarter earnings release will be out July 28.

The earnings report is not just another market update. It could become part of PayPal’s argument over whether the company should accept the offer or push for a higher valuation. Read about how The Earnings Paradox here.

• If PayPal can show that its turnaround is gaining traction: The board has stronger grounds to argue that the current proposal undervalues the business. The stock could continue moving towards the offer price and potentially higher if expectations for a better bid grow.
• If results disappoint, shareholders may be more willing to view the premium as an attractive exit and price movement from some of the recent takeover premiums could disappear.

The stock remains more than 81% below its pandemic-era highs. For some investors, a 28% premium may represent an opportunity to exit after years of disappointment, regardless of what management believes the company could eventually become.

PayPal reported 439 million active accounts in the first quarter, up only around 1% from a year earlier. However, account numbers alone do not explain the company’s value.

A buyer is not paying for accounts to simply exist. It is paying for customers who continue to use PayPal at checkout, generate transaction volume, and remain engaged despite competition from Apple Pay, saved cards, and other digital wallets.

That is what the July 28 earnings report needs to clarify. The strategic argument is clear. The valuation argument is not.

Traders take stock

The next two weeks will decide PayPal’s direction.

The areas worth watching are:

• branded checkout growth
• Venmo monetisation
• progress on cost reductions
• management’s outlook for the rest of the year

The strategic case for the acquisition is straightforward. Stripe wants what PayPal already owns: a recognised consumer payments brand, a large user base, and an established digital wallet.

The more difficult question is whether those assets are worth more inside Stripe’s ecosystem than they are as a standalone company.

Either way, the next two weeks will reveal more than the next round of headlines.

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