Burry Isn't Alone in Loading Up on PayPal — Here's Why It's Time to Follow the Smart Money

PayPal is highlighted as trading around $50 per share at 9.3x trailing P/E, with the article arguing the stock looks deeply undervalued after a prolonged drawdown of more than 80% from its highs. The company is undergoing a turnaround under new leadership, including separating Venmo into a standalone unit and pushing into ad-tech and AI-driven opportunities. The piece also notes that several prominent managers, including Bruce Richards, Donald Yacktman, and Ray Dalio, bought PayPal in the fourth quarter of 2025.

Analysis

The market is still treating this as a simple “AI winners vs. AI skeptics” narrative, but the more interesting setup is that capital is rotating toward balance-sheet repair and cash conversion quality. That favors PYPL because it is no longer priced like a growth compounder; it’s being valued like a shrinking franchise with optionality, which creates asymmetry if execution merely stabilizes. The key second-order effect is that any modest operational improvement can trigger multiple expansion from depressed sentiment faster than revenue growth alone would justify.

The biggest near-term risk is that the turnaround thesis is a multiquarter story while investors have a very short attention span. If payments volume or monetization at the platform layer disappoints again, the stock can re-rate lower quickly because there is little narrative support left; this is a “prove-it” name, not a “benefit of the doubt” name. The flip side is that the downside may be more contained than in the market’s mind because a lot of bad news is already embedded in expectations and positioning looks under-owned relative to large-cap software/fintech peers.

For NVDA and PLTR, the contrarian angle is that bearish positioning can be right on valuation and still lose on timing. The market is rewarding scarcity and durability, and unless there is a clear capex slowdown or a miss tied to deployment economics, squeezes can persist for months. The more actionable angle is not to short the “AI trade” broadly, but to look for where AI enthusiasm is creating indirect losers through budget reallocation; PYPL could actually be one of the beneficiaries if AI-driven ad-tech and merchant tools improve ROI rather than merely adding cost.

The cleanest read-through is that the article’s bullishness on PYPL is really a bet on management credibility plus operating leverage from simplification. If that works, the stock can re-rate over 6-12 months without requiring heroic top-line growth; if not, the low multiple becomes a value trap. That makes timing and catalyst selection more important than the absolute valuation headline.

Key Decisions for Investors

• Initiate a starter long PYPL position on weakness, with a 6-12 month horizon; target a re-rating toward low-teens P/E if execution stabilizes, and cut if the next two quarters fail to show margin or engagement improvement.
• Express the AI-vs-value contrast with a pair trade: long PYPL / short a basket of crowded AI winners (e.g., NVDA or PLTR) only if you want to monetize sentiment divergence; keep size modest because borrow/squeeze risk is high.
• Sell downside protection against PYPL via cash-secured puts at strikes 10-15% below spot over the next 2-3 months; the premium can be attractive if you’re willing to own a broken-but-improving franchise.
• Avoid outright shorting NVDA or PLTR into strength unless you have a catalyst within 1-2 quarters; instead, use call spreads or put spreads to define risk because momentum can remain detached from fundamentals longer than expected.
• Watch for a catalyst in PYPL from product/leadership updates or evidence that Venmo/adjacent monetization is lifting take-rate; if confirmed, add to position on the first post-earnings pullback rather than chasing gap-ups.