PayPal Valuation Sinks Below Former Parent eBay Following Earnings Miss
San Jose, Wednesday, 4 February 2026.
In a watershed moment for the fintech sector, PayPal’s market capitalization has fallen below that of its former parent, eBay, for the first time since their 2015 separation. Following a disappointing fourth-quarter 2025 earnings report released in early February 2026, PayPal shares plunged, dragging its valuation down to approximately $40 billion—a stark contrast to its $360 billion peak in 2021. This reversal underscores the company’s struggle against intensifying competition and slowing growth, even as it attempts to pivot toward AI-driven “agentic commerce” under incoming leadership. The valuation crossover signals a profound shift in market sentiment, highlighting the challenges facing the digital payments giant.
Earnings Miss Triggers Massive Sell-Off
The catalyst for this valuation reset was the release of PayPal’s fourth-quarter 2025 financial results, which failed to meet Wall Street’s expectations. On Tuesday, February 3, 2026, the company’s shares fell 17%, erasing billions in shareholder value in a single trading session [1]. While the company reported net revenues of $8.68 billion, this figure fell short of the $8.8 billion analysts had forecast [1]. Similarly, adjusted earnings came in at $1.23 per share, missing the projected $1.28 per share [1]. Despite a 9% increase in total payment volume (TPV) to $475 billion for the quarter [6], the market’s reaction was swift and unforgiving, driving the stock down to levels that placed its market capitalization at approximately $40 billion [1].
A Reversal of Fortunes
The current valuation of roughly $40 billion represents a dramatic fall from grace for a company that was once the undisputed king of digital payments. When PayPal split from eBay in July 2015, the market valued the payments processor at approximately $49 billion, significantly higher than its former parent’s $35 billion valuation at the time [1]. In the ensuing years, PayPal’s dominance surged, with its market capitalization peaking at approximately $360 billion in July 2021—a staggering $315 billion more than eBay [1]. Today’s valuation implies a decline of approximately -88.889% from that peak, leaving it worth less than eBay, which currently holds a market value of roughly $42 billion [1].
Leadership Changes and the AI Pivot
In an effort to arrest this decline and reignite growth, PayPal is undergoing a significant leadership transition. Enrique Lores has been appointed as the next President and CEO, effective March 1, 2026, taking the reins from interim CEO Jamie, who candidly admitted that the company had “not moved fast enough” [6]. The company is betting heavily on what it calls “agentic commerce”—an AI-driven approach designed to integrate PayPal more deeply into the shopping experience [1]. PayPal has already launched agentic purchasing capabilities through Perplexity and Microsoft Copilot [6], a strategy that analysts at Canaccord Genuity have described as potentially the company’s most promising idea since its days under eBay’s wing [1]. However, with the market currently treating the stock like a “second-hand item” [1], the pressure is on the new leadership to prove that these technological pivots can translate into tangible shareholder value.