Stripe Weighs PayPal Acquisition as It Reaches $159 Billion Valuation

This article first appeared on GuruFocus.

Stripe’s newly disclosed valuation milestone may not be the only catalyst drawing investor focus. People familiar with the matter said the closely held payments company is considering an acquisition of all or parts of PayPal Holdings Inc. (NASDAQ:PYPL), although the deliberations are described as early and there is no certainty they will result in a transaction. Representatives for both Stripe and PayPal declined to comment. The market reaction was swift: PayPal rose 6.7% to $47.02 in New York on Tuesday, bringing its market value to $43.3 billion.

The reported interest surfaced the same day Stripe said it reached a $159 billion valuation in an employee tender offer, reinforcing its position as one of the most valuable private companies in the industry. Founded by brothers Patrick and John Collison, Stripe has become a central player in digital payments, while PayPal, an early mover dating back to the late 1990s, has faced mounting competitive pressure as Apple Inc. and Alphabet Inc. gained traction with Apple Pay and Google Pay. Stripe President Patrick Collison said in an interview that PayPal has had a tough time over the past few years as the payments landscape shifted, but he declined to discuss any M&A hypotheticals.

Leadership changes and operating performance add further context. PayPal’s former board chair Enrique Lores is set to become president and chief executive officer on March 1, replacing Alex Chriss, who was ousted this month, and David Dorman has been appointed board chair. Chriss had taken over from Dan Schulman in 2023 during what was viewed as a necessary transition as consumer and business payment habits evolved. More recently, PayPal’s fourth-quarter profit and revenue missed analysts’ estimates, and results also showed a continued slowdown in payment volume. Against that backdrop, potential strategic interest from Stripe could be seen by investors as a sign that consolidation in digital payments is at least being explored.