PYPL Stock In Focus: Credit Card Rate Cap, Wall Street Downgrades Keep Investors Watching

Not all is well for financial companies after Trump’s credit card interest rate cap comments, but PayPal, although it saw a sell-off, could see growth from consumers turning to BNPL.

• The company’s shares have fallen nearly 4% in the last one week alone.
• Mizuho Securities said that this cap could reshape the U.S. consumer lending market and likely aid the fintech players in the BNPL sector
• eMarketer expects the total 2025 BNPL volume to crack $40 billion for PayPal.

PayPal's stock has lost over 31% last year, and concerns regarding its valuation have soared as U.S. President Donald Trump said that he was looking to introduce a one-year 10% cap on credit card interest rates after pointing out that the current rates were exorbitantly high.

The move by Trump, expected to go into effect on Jan. 20, has sparked a wide sell-off in the financial sector with big banks, credit card payment firms, and card-issuing companies.

PayPal has also been impacted by the move, with the company’s shares falling nearly 4% in the last one week alone. However, the stock snapped its five-day losing streak and closed up 2% higher on Wednesday.

PYPL’s Role In Credit Card Rate Cap

The proposal to cap interest rates on credit card draws has sparked investor worries that it could limit borrowing and further reduce purchasing power, as banks and credit card firms could roll back perks and card offerings.

But Mizuho Securities on Monday said this cap could reshape the U.S. consumer lending market and likely aid fintech players in the buy-now-pay-later (BNPL) sector. The brokerage said that fintech lenders such as Affirm Holdings, SoFi Technologies, Upstart, and BNPL platforms operated by Block and PayPal are most likely beneficiaries.

Last year, eMarketer reported that PayPal’s explosive launch into the BNPL space led to the company’s third-quarter BNPL volume growing 20% year-over-year. eMarketer expects the total 2025 BNPL volume to crack $40 billion for PayPal, well within reach of current industry leader Affirm’s volume, per the firm’s forecast, at $35.69 billion.

Wall Street’s Take On PYPL

On Wednesday, Piper Sandler lowered the firm's price target on PayPal to $74 from $76 ahead of the company's quarterly results in February, while maintaining a ‘neutral’ rating on the shares.

Brokerage Daiwa downgraded PayPal to ‘neutral’ from ‘outperform’ and said that although it should be able to achieve earnings growth of at least 10% through fiscal 2027, concerns about a decline in the company’s market share have strengthened.

The firm said that the stock's valuation “will remain at depressed levels” until the company's growth in total payment volume for branded checkout improves.

How Are Stocktwits Users Reacting?

Retail sentiment on PayPal jumped to ‘extremely bullish’ from ‘neutral’ a week ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.

In the last seven days, retail message volume increased 25% for PayPal on Stocktwits and the stock has witnessed a 5% spike in followers on the Platform.

Shares of PayPal have declined 35% in the last 12 months.

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