8 Reasons to Buy This Extremely Undervalued Stock for 2026

A Dec. 19, 2025 video argues PayPal (NASDAQ: PYPL) is “one of the most disconnected stocks” but provides no company financials; stock prices cited are from Dec. 19, 2025. The Motley Fool’s Stock Advisor did not include PayPal in its top-10 picks, and disclosures note Neil Rozenbaum holds PYPL while The Motley Fool holds and recommends PayPal and lists option positions (long Jan 2027 $42.50 calls and short Dec 2025 $75 calls). The piece is primarily opinion and promotional content rather than fresh earnings or guidance, so its direct market-moving information is limited.

Analysis

Market structure: A sustained re-rating of PYPL materially benefits card networks (V, MA) and merchant acquirers (FIS, FISV, NDAQ for market services) because risk-averse merchants shift toward fee-stable incumbents; consumer-focused fintechs (SQ, Adyen) can win share if PayPal retrenches. Reduced investor demand for platform plays pushes PYPL implied volatility and option skew higher; expect short-term bid for puts and elevated flows into volatility products, tightening supply of deep OTM put liquidity.

Risk assessment: Tail risks include a regulatory action on BNPL/merchant fees or a platform outage causing multi-day transaction loss—each could knock 20–35% off market cap in a shock scenario. Timeline: days—options-expiry and flows; weeks—earnings/guidance; quarters—Venmo monetization and BNPL profitability will determine durable valuation; hidden dependency: merchant contractual cliffs and interchange mix can flip margins quickly.

Trade implications: Near-term, prefer option-based shorts (3-month puts) or pair shorts to cap position risk; pair long incumbents (V, MA) versus short PYPL to capture pricing-power differential. If IV spikes >8 vol points vs peers, sell structured premium (iron condor) around quarterly reports; if PYPL falls >15% in 30 days or breaks 200-day MA, ramp short notional to 2–3% of fund.

Contrarian angles: Consensus underestimates low-end monetization (Venmo, QR) where a 5–10ppt acceleration in TPV growth could re-rate PYPL 30–50% over 12–24 months. Overdone negatives create squeeze risk—avoid naked short stock; instead use asymmetric option structures to capture downside while leaving gas to buy on any green recovery.

Key Decisions for Investors

• Establish a tactical 1.5% notional bearish position in PYPL using 3-month ATM puts (or 1:1 put spread to cap cost) if PYPL drops >8% in 5 trading days or prints below its 200-day MA; increase to 3% notional only if the move exceeds 15% within 30 days.
• Enter a 2% pair trade: long Visa (V) equal-dollar vs short PayPal (PYPL) for 3–6 months to capture payment network pricing power; rebalance if the spread moves >10% in our favor or if V underperforms by >8%.
• If PYPL implied volatility (30-day) spikes >8 vol points above peers (V, MA), sell a 60-day iron condor sized to 1% portfolio risk to collect premium; cap max loss and delta-hedge weekly.
• On any selloff >25% from current levels or if company reports Venmo TPV acceleration >20% YoY in next two quarters, establish a 1–2% long position in PYPL shares with a 12–24 month horizon (buy the dip with a 10% trailing stop).