PayPal Stock: PayPal Earnings Beat Estimates, OpenAI Partnership Announced

PayPal Holdings (PYPL) on Tuesday reported third-quarter earnings and revenue that beat Wall Street estimates. PayPal stock initially rose, then pared gains as analysts weighed a new OpenAI e-commerce partnership and key financial metrics for its business.

The digital payments company reported September quarter earnings before the market opened. PayPal’s third-quarter earnings rose 12% to $1.34 per share on an adjusted basis. Revenue rose 7% to $8.42 billion. Also, Venmo’s Q3 revenue was up 20%.

Analysts expected PayPal to report earnings of $1.20 per share on revenue of $8.236 billion.

On the stock market today, PayPal stock jumped nearly 16% in early trading. Shares rose 3.9% to close at 73. As PayPal’s earnings report approaches, shares are down 17% in 2025.

OpenAI Partnership

In addition to announcing PayPal’s earnings, the company announced its first dividend to shareholders. PayPal targeted a payout ratio of 10% of adjusted net income.

Also, PayPal announced an e-commerce partnership with OpenAI, the creator of ChatGPT.

Under the OpenAI partnership, ChatGPT users who purchase will be able to complete their purchases instantly using a PayPal wallet. ChatGPT has over 800 million weekly users.

PayPal recently struck a similar deal with… Google (Google). Investors should be cautious, Truist Securities analyst Matthew Quade said in a report.

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“The most likely outcome here is that these AI platforms will make all payment options available to consumers,” Quade said. “This means that the success of proxy commerce will likely accelerate stock gains for e-commerce as a whole but will not solve PayPal’s market share loss issues within e-commerce, in our view.”

Analysts continue to focus on PayPal’s branded businesses – the online checkout button and digital wallet – amid concerns about losing checkout market share apple (Apple). Branded payments growth came in at 5%, in line with estimates.

The OpenAI partnership could give PayPal a much-needed boost, Evercore ISI analyst Adam Frisch said in a report.

“The ongoing growth challenges facing exiting brands have been well documented,” he said. “Proxy commerce is viewed by some as a potential ‘silver bullet’ to leverage PayPal’s large, global user base and reignite growth on what could be a next-generation commerce platform. Similar to Perplexity’s announcement a few months ago, today’s release about enabling PayPal on ChatGPT is certainly a positive development and sends shares understandably higher, but the key questions to address are when, how and how much additional volumes could result from these agreements.”

PayPal Stock: Key Metrics

In the third quarter, total payment volume (TPV) processed from merchant customers rose 8% to $458 billion versus estimates of $447.5 billion, according to Visible Alpha.

Branded TPV is associated with the online PayPal checkout button that many consumers use when shopping online. The company’s new definition of brand volume now includes paying with Venmo.

Another key financial metric, dollar transaction margin, 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 paying fees to credit card networks.

Active users are growing

In the third quarter, active PayPal accounts increased 1% to 438 million. PayPal bought back $1.5 billion of its own stock this quarter.

For the current quarter ending in December, PayPal said it expects adjusted earnings per share in a range of $1.27 to $1.31. At the midpoint, profit guidance came in just below the FactSet estimate of $1.31.

Repricing initiatives last year at the Braintree subsidiary put pressure on 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.

Technical evaluations of PayPal stock

San Jose, California-based PayPal has evolved from an online payment option into an app for mobile shopping and person-to-person payments.

Furthermore, PYPL stock carries an IBD Composite Rating of just 46 out of a top 99, according to IBD Stock Screener. The IBD Composite Classification combines five separate special classifications into one easy-to-use classification. The best growth stocks have a Composite Rating of 90 or better.

Also, PYPL stock has an Accumulation/Distribution rating of D-plus. This classification analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates that more funds are buying than selling.

The rating, on a scale of A+ to E, measures institutional buying and selling in a stock. A+ denotes heavy institutional buying, E denotes heavy selling. Think of C as neutral.

Follow Reinhardt Krauss on X, formerly Twitter, @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.

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