PayPal's stock pops on takeover hopes. Here's who could swoop in with a purchase.

By Emily Bary

Analysts think private-equity firms or other strategic buyers might see more value in PayPal than its $40 billion market cap currently reflects

PayPal's stock has been hammered in recent years due to competitive fears and execution issues.

PayPal Holdings' stock zoomed higher Monday after a Bloomberg News report suggested that its days as a standalone public company may be numbered.

The report said PayPal (PYPL) has talked with bankers after receiving unsolicited offers for all or part of the online payments company, though the interest from buyers is still at an early stage.

See more: Is PayPal bound for a breakup? Why the company's problems seem so hard to fix.

The report highlighted that PayPal's stock, trading at about seven times next year's estimated earnings per share, "is deeply undervalued" since the company operates "one of four globally recognized payment networks," Mizuho's Dan Dolev wrote in a note to clients.

Shares of PayPal rose 5.8% on Monday. The stock has dropped more than 85% from its peak close achieved in 2021 and now has a market capitalization just north of $40 billion.

A PayPal spokesperson declined to comment on the report.

Bernstein's Harshita Rawat wrote Monday that she thought private equity would be the most likely suitor for PayPal in its entirety, in part due to the company's "pristine balance sheet." Other less likely possibilities include Elon Musk - a PayPal co-founder who's now trying to carry out an "everything-app strategy," but who Rawat noted would face "liquidity constraints" - as well as large technology companies that may see strategic value in PayPal but could encounter regulatory hurdles if they tried to acquire it.

She also saw various potential suitors for Venmo, including American Express (AXP) and JPMorgan Chase (JPM). The latter could also prove a logical home for Braintree, which is a payment processor.

"On a high level, PayPal possibly attracting suitors at these rock-bottom valuation levels potentially can put a floor across the death march" of financial-technology valuations, Rawat wrote. Strategic buyers or private-equity firms "will likely see greater value than public-market investors."

See more: These fintech stocks could be big winners from Trump's 'populism' push, according to Citi

PayPal has struggled to contend in recent years with a changing payment-technology landscape. Services like Apple Pay (AAPL) have risen in popularity, and web browsers make it easy to store payment credentials without requiring shoppers to use a digital wallet like PayPal's. Some analysts have flagged issues related to operational execution and strategic priorities. And while the company has made progress in monetizing its Venmo platform, that hasn't come at the pace Wall Street once hoped.

When the company replaced Alex Chriss as CEO in February, it brought in Enrique Lores, who had been the CEO of HP (HPQ). Lores's background in helping to architect the breakup of HP and Hewlett Packard Enterprise, as well as his lack of operational experience in the payments industry, suggested to some analysts that PayPal's board of directors might be interested in a breakup.

"PayPal's incoming CEO will have many choices to make," Seaport Research's Jeff Cantwell said in a note to clients at the time. "One that we think is strongly worth considering is spinning out Venmo from PayPal. Venmo with its own budget, free and clear of the bureaucracy at PayPal - to us, that would be interesting."

-Emily Bary

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02-23-26 1651ET