PayPal Holdings Inc.

While that level of profitability is solid, it's still lower than the margins that most rated financial market infrastructure (FMI) companies generate. Increasing margins and defending market share may become challenging for PayPal, given the increasingly competitive digital payments environment. It's too early to say if the company's new leadership, including new CEO Alex Chriss, will prove successful, in our view. PayPal aims to transform the business strategy in 2024 by streamlining it while management focuses on profitable growth in the longer term. Finally, purchase and seller protection programs account for ongoing losses of 0.06%-0.08% of PayPal's total payment volume (we estimate that transaction losses will exceed $1 billion in 2024). The stable outlook reflects our expectation that PayPal will

...PayPal Holdings Inc.'s growth may moderate as it focuses on the profitability of its existing business. PayPal's revenue growth slowed to about 8% in 2023, and we expect it to remain between 5% and 9% in 2024 and 2025. PayPal's profitability, as measured by its EBITDA margin, improved slightly in 2023 and the first six months of 2024, to 26% from 25% in 2022. While that level of profitability is solid, it's still lower than the margins that most rated financial market infrastructure (FMI) companies generate. Increasing margins and defending market share may become challenging for PayPal, given the increasingly competitive digital payments environment. PayPal has almost completely reshuffled its top management over the last 12 months. PayPal's previous CEO, Dan Schulman--who was instrumental in the company's strategy since it separated from eBay in 2015--stepped down at the end of September 2023 following the substantial decline in PayPal's stock price over the course of 2022 and 2023. It's...

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