PayPal’s Stock Takes Another Hit as Morgan Stanley Slashes Rating
PayPal has faced another setback as Morgan Stanley slashed its stock rating and price target. The financial firm downgraded the company from Equalweight to Underweight, cutting the target from $74 to $51. This marks the third analyst downgrade for PayPal in December 2025 alone.
The downgrade follows concerns over PayPal’s growth prospects. Morgan Stanley highlighted slow progress in branded checkout integrations and ongoing struggles to monetise Venmo. Analysts also expect weak transaction margin growth through 2028, citing market share losses and declining take rates.
Competition in digital payments has intensified, with rivals like Block (Square), Stripe, Adyen, Fiserv (Clover), and Apple gaining ground. Morgan Stanley warned that PayPal’s position could weaken further in the coming years. Despite this, the company remains financially stable, with a current ratio of 1.34 and a debt-to-equity ratio of 0.56.
PayPal reported $32.86 billion in revenue for 2025, with a three-year growth rate of 12.7%. Its operating margin stands at 19.16%, and net margins are at 14.96%. Yet, Wall Street sentiment remains cautious, with an average target price of $80.02 and a recommendation score of 2.6.
The downgrade triggered a 0.8% drop in PayPal’s shares during premarket trading. Bank of America and J.P. Morgan had already lowered their ratings earlier in December, adding to the pressure.
PayPal now faces a lower price target of $51, down 31% from Morgan Stanley’s previous estimate. The company’s profitability remains solid, but competition and slower growth are raising concerns. Investors will be watching closely as the digital payments market evolves.
