PayPal's 2026 Forecast and the Emerging Securities Investigation: A Closer Look

PayPal’s 2026 Forecast and the Emerging Securities Investigation: A Closer Look

In a startling turn of events, PayPal Holdings, Inc. (NASDAQ: PYPL) has found itself at the center of an in-depth investigation by Levi & Korsinsky, LLP. This comes in light of a significant gulf between the company’s previous outlook for 2026 and its actual performance during the fourth quarter of 2025. Such a drastic deviation has sparked concerns about potential securities claims from investors who may have incurred losses due to misrepresented expectations.

The timeline of events leading to the investigation showcases a troubling narrative. On January 28, 2026, Rothschild Co Redburn made the news by downgrading PayPal’s price target drastically from $70 to $50. Hot on their heels, Morgan Stanley followed suit and mirrored these sentiments, also slashing their target to $50, attributing the change to a noticeable slowdown in checkout growth. With just a day to go before the earnings report release, analysts forecasted a lukewarm mid-single-digit revenue growth and moderate growth in earnings per share.

However, when the earnings were finally disclosed on February 3, the actual numbers fell far short. The revenue reported was $8.68 billion, which missed the expected $8.80 billion by about $120 million, marking a significant 1.4% gap. Moreover, the adjusted earnings per share came in at $1.23, below the anticipated range of $1.30 to $1.33, representing a deficit of between 5.4% and 7.5%. Perhaps even more concerning were the projections for the upcoming year, as the company’s guidance forecasted a decline in 2026 transaction margin dollars with adjusted earnings per share showing only a slight recovery.

Notably, during a third-quarter 2025 earnings call held on October 28, just about 98 days prior to the disappointing report, company management had failed to indicate that such a significant revision to their outlook was on the horizon. This raises crucial questions about the information available to PayPal's leadership and when internal recognition of the decline in growth began to emerge.

The ramifications of these developments were immediate and severe. On February 3, investors reacted with alarm as PayPal stock plummeted by 19-20%, ultimately settling around $42—a stark drop that also marked a new 52-week low for the company. The upheaval led to a reported increase in short interest as traders braced for further downturns in stock value.

For investors who have lost money on their PayPal securities during these tumultuous times, Levi & Korsinsky, LLP is urging them to reach out to discuss possible legal recourse. This nationally respected law firm, with locations in New York, California, Connecticut, and Washington, D.C., specializes in prosecuting securities class actions and advocating for shareholders' rights.

As this situation unfolds, the implications for PayPal and its investors could be significant. With heightened scrutiny and a looming investigation, the financial landscape for one of the leading players in electronic payments is under intense examination. Investors are advised to stay informed and consider their options carefully as the investigation by Levi & Korsinsky continues to evolve.