James, thanks for your analysis of Stripe & Advent's bid for PayPal.
Last month, I shortlisted PYPL. The market seems to underestimate its growth potential in BNPL.
In 2025, PYPL generated ~ USD 40 bn in BNPL transaction volume across its 227 mn monthly active accounts (MAUs).
Blended across its entire active user base, this equates to ~ USD 176 in BNPL volume per MAU. For context, the US industry average sits significantly higher at USD 848 per active BNPL user.
BNPL is a dangerous game to play. It is essentially unsecured credit being offered to people with insufficient disposable income to make the purchase in the first instance (the kind of people you don't necessarily want to lend to without some kind of security).
Inflation isn't going away. If anything it will get worse. AI is pushing up the price of tech components, but those components are used in almost everything we use (smart phones, cars, refrigerators, TVs, etc). So that's the first wave of inflation. Next, AI is pushing up the price of power as it consumes so much energy. We all rely on power consumption. Apple has already announced a 20% increase in the price of its new phones and computers. Just one example of many.
If inflation is raging, rates aren't coming down anytime soon, no matter what Trump wants.
If anything, rates may go higher.
US national debt refinancing costs are now more than its defense spending. It's out of control and the same in many western economies. This is yet another force pushing rates higher.
Inflation, higher rates and AI displacing jobs raises the prospect of stagflation. There could be a recession coming over the hill. Do you want to be exposed to BNPL junk credit at such a time?
PayPal generally keeps the credit risk on its own balance sheet rather than passing it through. It could be a ticking time bomb. Just playing devil's advocate. not a prediction, just a real risk that ought to be considered.
PayPal has suffered from poor management, but that doesn't make it a bad business.
Michael Burry has always argued that PayPal is a classic deep-value turnaround and mispricing play.
His rationale can be broken down into three core points:
- Severe Market Mispricing: Burry argues that the market has prematurely written off PayPal due to an over-fixation on the "AI craze" and short-term fintech sector headwinds. He notes that the market is heavily punishing an established business with massive, highly resilient "owner earnings".
- Strategic Value: Trading at a depressed forward P/E multiple of just 8x earnings, Burry pointed out that PayPal's cash generation makes it an incredibly lucrative target for private equity firms or strategic acquirers. This view has been validated by Stripe (and Advent International's) takeover bid.
- Aggressive, Accretive Share Buybacks: With a debt-light balance sheet and robust free cash flow, PayPal has been buying back its own stock "hand over fist". At single-digit earnings multiples, these massive repurchases are highly accretive, aggressively lifting the company's per-share intrinsic value.
Rejecting the Stripe/Advent takeover offer as a "lowball opening bid," Burry stated that PayPal is one of the cheapest quality assets in his portfolio. Using his proprietary valuation frameworks, he estimates PayPal's conservative intrinsic value sits between $75 and $115 per share.
Once again, confirmation that the payments sector is hugely undervalued. It isn’t just PayPal. Look at Adyen, Wise, dLocal and others.
James, thanks for your analysis of Stripe & Advent's bid for PayPal.
Last month, I shortlisted PYPL. The market seems to underestimate its growth potential in BNPL.
In 2025, PYPL generated ~ USD 40 bn in BNPL transaction volume across its 227 mn monthly active accounts (MAUs).
Blended across its entire active user base, this equates to ~ USD 176 in BNPL volume per MAU. For context, the US industry average sits significantly higher at USD 848 per active BNPL user.
Details: https://www.angsanaanderson.com/p/paypal-78x-pe-with-a-takeover-catalyst?r=5rl2u5
BNPL is a dangerous game to play. It is essentially unsecured credit being offered to people with insufficient disposable income to make the purchase in the first instance (the kind of people you don't necessarily want to lend to without some kind of security).
Inflation isn't going away. If anything it will get worse. AI is pushing up the price of tech components, but those components are used in almost everything we use (smart phones, cars, refrigerators, TVs, etc). So that's the first wave of inflation. Next, AI is pushing up the price of power as it consumes so much energy. We all rely on power consumption. Apple has already announced a 20% increase in the price of its new phones and computers. Just one example of many.
If inflation is raging, rates aren't coming down anytime soon, no matter what Trump wants.
If anything, rates may go higher.
US national debt refinancing costs are now more than its defense spending. It's out of control and the same in many western economies. This is yet another force pushing rates higher.
Inflation, higher rates and AI displacing jobs raises the prospect of stagflation. There could be a recession coming over the hill. Do you want to be exposed to BNPL junk credit at such a time?
PayPal generally keeps the credit risk on its own balance sheet rather than passing it through. It could be a ticking time bomb. Just playing devil's advocate. not a prediction, just a real risk that ought to be considered.
thank you, James; another excellent insightful comment on the payment sector, and on Adyen; very helpful!
PayPal has suffered from poor management, but that doesn't make it a bad business.
Michael Burry has always argued that PayPal is a classic deep-value turnaround and mispricing play.
His rationale can be broken down into three core points:
- Severe Market Mispricing: Burry argues that the market has prematurely written off PayPal due to an over-fixation on the "AI craze" and short-term fintech sector headwinds. He notes that the market is heavily punishing an established business with massive, highly resilient "owner earnings".
- Strategic Value: Trading at a depressed forward P/E multiple of just 8x earnings, Burry pointed out that PayPal's cash generation makes it an incredibly lucrative target for private equity firms or strategic acquirers. This view has been validated by Stripe (and Advent International's) takeover bid.
- Aggressive, Accretive Share Buybacks: With a debt-light balance sheet and robust free cash flow, PayPal has been buying back its own stock "hand over fist". At single-digit earnings multiples, these massive repurchases are highly accretive, aggressively lifting the company's per-share intrinsic value.
Rejecting the Stripe/Advent takeover offer as a "lowball opening bid," Burry stated that PayPal is one of the cheapest quality assets in his portfolio. Using his proprietary valuation frameworks, he estimates PayPal's conservative intrinsic value sits between $75 and $115 per share.
Once again, confirmation that the payments sector is hugely undervalued. It isn’t just PayPal. Look at Adyen, Wise, dLocal and others.