PayPal Jumps 23% on $60.50 Stripe, Advent Bid
Stripe and Advent International's $60.50-per-share bid for PayPal has triggered a 23% share surge, but board resistance and a competing valuation from Michael Burry signal a potential bidding war.
PayPal shares surged 23% this week after Stripe and private equity firm Advent International made a formal offer to acquire the digital payments company for $60.50 per share. The bid ends months of market speculation about a potential combination between the two payment processors. However, the proposed transaction faces immediate resistance from PayPal's leadership.
According to a person familiar with the matter who spoke to Reuters, PayPal's board views the $60.50 offer as inadequate. The directors believe the proposal fails to capture the company's long-term potential under its current turnaround strategy. This institutional pushback suggests the acquisition is far from certain and leaves the door open for competing bids.
Prominent investor Michael Burry shares the board's skepticism regarding the valuation. Applying his intrinsic value methodology, Burry estimates PayPal is worth between $110 and $115 per share. That figure represents a roughly 80% premium over the current bid. Even after this week's rally, PayPal trades at just 10.5 times earnings, a multiple that supports the argument the stock is fundamentally undervalued.
A sum-of-the-parts analysis highlights Venmo as a critical driver of that underlying value. The peer-to-peer payments application boasts nearly 100 million users and has generated double-digit growth in total payment volume for six consecutive quarters. While PayPal's core processing business has matured, Venmo's ongoing expansion would likely be a highly attractive asset for Stripe.
The market is now left to weigh whether Stripe and Advent will increase their proposal to satisfy the board. If the bidders walk away and no competing offers emerge, PayPal's shares could face immediate downward pressure. Until a definitive agreement is reached or formally rejected, the stock will likely trade based on the evolving dynamics of this valuation dispute.
