Stripe and Advent negotiate PayPal purchase amid its worst stock market performance

PayPal Holdings is negotiating its sale to a group consisting of fintech company Stripe and private equity firm Advent International, following months in which the payments company traded at all-time lows on the stock market.

According to The Wall Street Journal, which cited sources familiar with the matter, Stripe and Advent submitted an offer in July of $60.50 per share, a figure PayPal deemed insufficient. Since then, both parties have been negotiating a higher price and could reach an agreement in the coming weeks, although sources cautioned that there is no guarantee the talks will succeed.

The July proposal valued PayPal at about $53 billion, well below the peak the company reached during the pandemic, when its shares surpassed $300 and its market capitalization hovered around $280 billion. Before the offer was announced, the company's shares were trading at historic lows, with a market value of just $40 billion. Following the WSJ's report on the negotiations, the stock rose 1.8% on Friday, and PayPal's market capitalization once again approached $53 billion.

Stripe, a privately held payment processor founded by brothers Patrick and John Collison, reached a valuation of $159 billion earlier this year and counts Sequoia Capital among its investors. Advent, headquartered in Boston, manages more than $90 billion and focuses its investments on five sectors: financial and business services, healthcare, consumer, industrial, and technology.

The potential deal has been met with skepticism from some analysts. An analyst at William Blair described the initial offer as a lowball bid and questioned its business rationale.

The potential sale comes amid the turnaround plan being driven by CEO Enrique Lores, who took office in March following the departure of Alex Chriss, after the company issued an earnings warning. PayPal had attributed its weak projections at the time to stagnation in its proprietary online payment product and internal execution failures. Since his arrival, Lores has reorganized operations into three business lines and announced that the company will accelerate the adoption of artificial intelligence. When presenting the quarterly results in late July, he said that strategy remained the priority, though he clarified that they would evaluate any opportunity that maximized shareholder value.

In that same report, PayPal highlighted the growth of Venmo, its peer-to-peer payment platform, and Braintree, its payment processor, along with the performance of its debit card and "buy now, pay later" businesses.