Having fallen steadily since the summer of 2021, former tech darling PayPal Holdings Inc (NASDAQ: PYPL) is once again testing fresh lows. The stock now trades just above $40, roughly where it debuted publicly more than a decade ago. There’s no getting around it—the past couple of years have been a horrible time to be an investor.
Yet for those of us on the sidelines, behind the sell-off sits a number that’s almost impossible to ignore. With all the selling, PayPal’s price-to-earnings (P/E) ratio has collapsed to 7.67, one of its lowest readings ever. For a $38 billion technology company that still generates billions in annual profit and free cash flow, that multiple stands out as extraordinarily low. It is not just cheap relative to its pandemic peak. It is cheap relative to its own history and to most of its mega-cap tech peers. The question investors should be asking themselves is whether this is a generational value setup or a classic value trap.
