PayPal shares surged nearly 7% on Tuesday after Bloomberg reported that Stripe, the privately held payments juggernaut now valued at $159 billion, is considering an acquisition of all or parts of the digital payments pioneer. The stock hit intraday highs of $47.40 before closing around $46.80, extending a rally that began Monday on separate reports that PayPal had attracted unsolicited takeover interest from potential bidders.
Let that sink in for a moment. The company that was once worth $308 a share, the company that essentially invented online checkout, is now so beaten down that its biggest competitor is kicking the tires on buying it. PayPal’s market cap hovers around $41 billion. Stripe, which has never gone public and has no immediate plans to, is worth nearly four times that.
This would be the largest fintech acquisition in history. It would also be one of the most audacious.
What We Know So Far
According to Bloomberg’s reporting, Stripe has expressed “preliminary interest” in acquiring PayPal or its assets. The discussions are described as early-stage, with no certainty they will lead to a transaction. Stripe is reportedly exploring both a full acquisition and the possibility of cherry-picking specific business segments.
Both companies declined to comment. Reuters could not independently verify the report.
The timing is notable. The Bloomberg report dropped on the same day Stripe announced a new tender offer valuing the company at $159 billion, a staggering 74% jump from the $91.5 billion valuation in its February 2025 secondary sale. Investors including Thrive Capital, Coatue, and Andreessen Horowitz are buying employee shares. In its annual letter, co-founders Patrick and John Collison disclosed that total payment volume on Stripe’s platform reached $1.9 trillion in 2025, up 34% year-over-year, and that its revenue suite is on track to hit a $1 billion annual run rate this year.
Stripe co-founder John Collison told CNBC’s Andrew Ross Sorkin on Tuesday that the company isn’t aiming for an IPO, saying it would distract from product and business growth. Acquiring PayPal would certainly be an alternative way to deploy capital.
Why PayPal Is Suddenly Acquirable
Three weeks ago, PayPal’s board fired CEO Alex Chriss after just two and a half years, replacing him with board chairman Enrique Lores, who had been running HP. The board’s explanation was blunt: the pace of change and execution under Chriss was “not in line with the Board’s expectations.” The announcement came alongside Q4 results that missed on both revenue and earnings, with adjusted EPS of $1.23 versus the $1.29 Wall Street expected, and revenue of $8.68 billion versus the $8.79 billion consensus.
The real killer was the forward outlook. PayPal projected full-year 2026 adjusted profit to decline in the low-single digit percentage range, or increase only slightly. Branded checkout growth, the metric investors care about most, slowed to just 1%. The stock dropped about 17% on that news alone.
PayPal is now trading at roughly 7.7 times free cash flow and about 8.3 times normalized earnings. For context, Visa and Mastercard trade above 25 times earnings. The broader financial sector averages a P/E of around 20.8. PayPal is cheap by any historical measure, and it is cheap because the market has lost confidence that the company can defend its core business against Apple Pay, Google Pay, Cash App, Klarna, and yes, Stripe itself.
There is also now a class-action securities fraud lawsuit hanging over the company, alleging material misstatements about growth prospects under previous leadership, with a lead plaintiff deadline of April 20, 2026.
The Strategic Logic (And The Complications)
On paper, a Stripe-PayPal combination makes a kind of terrifying sense for every other player in payments. Stripe dominates developer-first, API-driven payment infrastructure. PayPal still owns the consumer checkout button that sits on millions of merchant sites and commands 434 million active accounts. Stripe is the plumbing. PayPal is the front door. Combining them would create a vertically integrated payments empire that touches both sides of virtually every online transaction.
There is also a stablecoin angle. Stripe acquired Bridge, a stablecoin infrastructure platform, for $1.1 billion in late 2024 and has since seen that business quadruple its payment volume. Stripe is also developing Tempo, a payments-focused blockchain, in collaboration with venture firm Paradigm. PayPal, for its part, launched its own stablecoin, PYUSD, though it has struggled to gain meaningful traction. A combined entity would have significant reach in both traditional and crypto-native payment rails.
Then there is Venmo, still one of the most recognized peer-to-peer payment apps in the United States. Under Chriss, PayPal made progress monetizing Venmo, with monthly active accounts growing over 30% and debit card usage up over 20%. For Stripe, which has no consumer-facing brand, Venmo would be an instant on-ramp to compete with Block’s Cash App.
But the complications are considerable. Regulatory scrutiny would be intense. Combining the two largest independent online payment processors would raise immediate antitrust flags in both the United States and the European Union. There is the question of how a private company at $159 billion finances the acquisition of a public company at $41 billion (or more, with a takeover premium that analysts estimate could range from 30% to 50%). And there is the basic cultural challenge of merging a lean, developer-obsessed startup with a legacy enterprise that has been cycling through CEOs and strategic pivots for years.
What Investors Should Watch
This could go several directions. Stripe may pursue a full acquisition. It may go after specific pieces, perhaps Braintree (PayPal’s merchant processing business), perhaps Venmo, perhaps the international payments infrastructure. Or the preliminary interest could fizzle into nothing, as many early-stage deal explorations do.
For PayPal shareholders, the acquisition interest validates what value investors have been arguing for months: the stock is too cheap given the underlying cash flows. PayPal still generates north of $6 billion in annual free cash flow. It processes more than $1.5 trillion in total payment volume annually. Its 434 million active accounts represent real, defensible distribution. The question has always been whether management could figure out how to use those assets effectively. A buyer like Stripe might have a better answer.
For the broader fintech landscape, this is a signal that consolidation is accelerating. The era of infinite multiples and independent growth stories is over. The companies that survived the 2022-2025 valuation reset are now either acquiring or being acquired. Stripe, with its profitability restored, its valuation reset higher, and its IPO plans shelved, has the financial firepower and strategic ambition to be the acquirer.
PayPal’s new CEO Enrique Lores has not yet officially started, with his tenure beginning March 1. He inherits a company that may not stay independent long enough for him to execute a turnaround. That is either a crisis or an opportunity, depending on what kind of deal Stripe puts on the table.
Either way, the fact that the inventor of online checkout is now a potential acquisition target for a company less than half its age tells you everything about how fast the payments industry has moved, and how badly PayPal got left behind.
