PayPal Sinks 12% as a Reported $53 Billion Takeover Effort Falls Apart

PayPal shares tumbled on Friday after a reported takeover effort came apart, erasing weeks of gains built on deal speculation. The stock changed hands near $53.90 in early Friday afternoon, down more than 12% and among the weakest names on the Nasdaq. Volume ran heavy. By midday it had traded more than two and a half times its recent daily pace.

The slide followed reports that a group led by Stripe and Advent International had dropped its pursuit of the payments company. Bloomberg reported the withdrawal. The suitors had offered $60.50 a share, valuing PayPal at more than $53 billion, according to accounts of talks that first surfaced in mid-July. PayPal has not confirmed the figures, and both Stripe and Advent are privately held.

Reuters reported earlier that PayPal’s board never formally embraced the approach, viewing the price as too low and flagging the regulatory and financing hurdles a deal that size would face. A purchase at that price would have ranked among the largest fintech buyouts ever attempted, with the group said to have lined up billions in committed bank financing. Once the suitors were reported to have walked, the premium that had lifted the stock through the summer came out fast.

The summer rally reverses

Friday’s drop mostly undoes a three-month climb. PayPal had risen about 20% over that stretch as takeover chatter spread, and the decline pulls it back toward where it traded before the talk began. The stock still sits well above its 52-week low of $38.46, and far under the $93.66 high it touched over the past year. Heading into Friday, the company carried a market value near $46 billion.

Takeover premiums are fragile by nature. They rest on a deal closing, and they vanish the moment the buyer steps back. That is broadly what played out here, compressed into a few hours of trading.

The turnaround has to stand on its own

With the deal premise gone, attention swings back to how the business is actually performing. PayPal reported second-quarter results in late July that beat expectations and lifted its full-year profit outlook, part of a turnaround the current management team has pressed. Even so, the company has wrestled with a slipping transaction take rate as it leans on lower-margin payment volume. The core numbers, not a buyer, now have to carry the stock.

The risks did not vanish. Analysts at Mizuho pointed to competition in branded checkout, share pressure in its German market, and a fresh challenge to Venmo from newer money-transfer services. Each was a live concern before the takeover talk surfaced, and each returns to the foreground now that the bid is gone.

Where the floor gets tested

The near-term question is whether buyers step in at the lower price. PayPal’s next earnings report, due this fall, will be the first hard read on whether the raised guidance holds up. Deal speculation can always resurface, and more than one suitor has circled the company before. For now, though, the market is valuing PayPal on its own results again. The easy money left with the bidders.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.