As of May 22, 2025, PayPal Holdings Inc's estimated intrinsic value ranges from $51.33 to $106.67 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $106.67 | +48.9% |
| Discounted Cash Flow (5Y) | $93.07 | +29.9% |
| Dividend Discount Model (Multi-Stage) | $51.33 | -28.4% |
| Dividend Discount Model (Stable) | $63.74 | -11.0% |
| Earnings Power Value | $53.37 | -25.5% |
Is PayPal Holdings Inc (PYPL) undervalued or overvalued?
With the current market price at $71.65, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate PayPal Holdings Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.83 | 0.86 |
| Cost of equity | 7.7% | 9.7% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 19.7% | 21.8% |
| Debt/Equity ratio | 0.16 | 0.16 |
| After-tax WACC | 7.1% | 8.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $93 | $95,701M | 73.7% |
| 10-Year Growth | $107 | $108,926M | 56.5% |
| 5-Year EBITDA | $84 | $86,726M | 71.0% |
| 10-Year EBITDA | $96 | $98,219M | 51.8% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $4,486M |
| Discount Rate (WACC) | 8.8% - 7.1% |
| Enterprise Value | $50,810M - $63,383M |
| Net Debt | $5,189M |
| Equity Value | $45,621M - $58,194M |
| Outstanding Shares | 973M |
| Fair Value | $47 - $60 |
| Selected Fair Value | $53.37 |
| Metric | Value |
|---|---|
| Market Capitalization | $69682M |
| Enterprise Value | $74871M |
| Trailing P/E | 15.33 |
| Forward P/E | 16.47 |
| Trailing EV/EBITDA | 12.60 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.16 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $32.00 |
| Discounted Cash Flow (5Y) | 25% | $23.27 |
| Dividend Discount Model (Multi-Stage) | 20% | $10.27 |
| Dividend Discount Model (Stable) | 15% | $9.56 |
| Earnings Power Value | 10% | $5.34 |
| Weighted Average | 100% | $80.43 |
Based on our comprehensive valuation analysis, PayPal Holdings Inc's weighted average intrinsic value is $80.43, which is approximately 12.3% above the current market price of $71.65.
Key investment considerations:
Given these factors, we believe PayPal Holdings Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.