Shares in PayPal surged on Wednesday as reports emerged that Irish-led payments giant Stripe is considering a bid for the digital payments pioneer. PayPal’s stock rose 2.5 per cent in New York, following a 6.7 per cent gain on Tuesday, giving the company a market value exceeding $43 billion.
Stripe, valued at $159 billion following a recent tender offer, is weighing an acquisition of all or parts of PayPal, according to people familiar with the matter. The deliberations are in their early stages, and a transaction is not guaranteed, these sources said. Both Stripe and PayPal declined to comment on the reports.
The potential deal would bring together two major players in the payments industry, both of whom have been expanding into the realm of stablecoins and blockchain technology. Stripe acquired Bridge, a company building tools for businesses to issue U.S. Dollar-backed tokens, for $1.1 billion in 2024, signalling its growing ambitions in the crypto space. PayPal launched its own dollar-backed stablecoin, PYUSD, in 2022.
Stripe’s interest in PayPal comes after the company announced the completion of a tender offer that valued it at $159 billion. The offer allowed employees to sell shares, and investors including Thrive Capital, Coatue, and Andreessen Horowitz participated. Stripe’s revenue, generated from businesses using its platform, rose more than a third last year, reaching $1.9 trillion – equivalent to roughly 1.6 per cent of global GDP.
Patrick Collison, Stripe’s president, acknowledged PayPal’s challenges in a recent interview, noting the changing payments landscape with the rise of Apple Pay and Google Pay. “PayPal has had, obviously, a tough time over the past few years and the landscape has changed quite a bit,” Collison said. He declined to comment on specific M&A hypotheticals.
PayPal has faced headwinds in recent years as it seeks to modernize its payment technologies and compete with newer rivals. The company’s fourth-quarter profit and revenue missed analysts’ estimates, and payment volume growth has slowed. Alex Chriss was appointed CEO in 2023 in an attempt to address these challenges, but was ousted this month, with Enrique Lores set to take over on March 1.
The news of Stripe’s potential interest in PayPal emerged the same day Stripe announced its increased valuation, highlighting the company’s position as one of the industry’s most valuable private firms. Stripe’s CEO, Patrick Collison, has previously indicated that an initial public offering is not currently a priority for the company.