From pioneer to takeover target: how PayPal lost its lead
PayPal, once a dominant player in the digital payments sector and a favourite among investors, is now facing a possible unwanted takeover. The company recently received a takeover bid of $53 billion (around €46.4 billion) from investment firm Advent International and Stripe.
While PayPal’s management is studying the bid, insiders suggest that the proposed price of $60.50 per share is considered insufficient.
The company’s current difficult situation marks a significant decline compared with its peak in 2021, when its valuation stood at $360 billion (around €315 billion), according to Reuters.
Founded in 1998, PayPal was a pioneer in online transactions and served as a springboard for influential figures such as Peter Thiel and Elon Musk. After being owned by eBay for more than 10 years, it became an independent entity in 2015. However, a combination of slowing growth and aggressive competition has eroded its market position.
Industry experts have pointed to a lack of innovation as the main cause of this decline. While competitors such as Samsung, Google and Apple evolved rapidly, PayPal was slow to integrate mobile-focused payment solutions and digital banking services.
Because of that stagnation, Apple Pay managed last year to surpass PayPal’s market share in the United States by 10 percentage points. In addition, the company has struggled to integrate artificial intelligence and agentic commerce, whereby AI automatically handles purchases.
Financial analysts also pointed to strategic mistakes in pricing. Some argue that PayPal focused too heavily on acquiring users through low prices instead of maximising profit.
That approach, combined with the flattening of the user base and the mediocre performance of its “buy now, pay later” features, has reduced the company’s momentum. Even Venmo, an important part of the ecosystem, has seen its growth slow.
Internal instability has further complicated matters. Over the past four years, three different CEOs have been at the helm. Recent reports point to friction between the board of directors and the executive management, including a contentious agreement with OpenAI to integrate the PayPal wallet into ChatGPT.
Current CEO Enrique Lores is now leading a second attempt to revitalise the company, although he has not publicly confirmed whether a sale is being considered.
The company’s future remains uncertain. Some investors are wondering whether PayPal is worth more as a whole, or whether its various parts should be sold off separately. Although Advent and Stripe have substantial financial resources – including billions in equity and bank loans – to potentially raise their bid, other competing offers seem unlikely. Market analysts suggest that this particular proposal may currently be the most realistic way for PayPal to restore its value.
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