PayPal’s Contrarian Magnet Pulls in Michael Burry as Wall Street Wavers

The stock has shed roughly a fifth of its value over the past year, yet one of the most famous value hunters in modern finance is quietly loading up. Michael Burry, the investor immortalized in The Big Short, has built a stake of around 3.5% in PayPal, making it his top pick in the software space. His entry price hovered near $49 a share, a level that now sits well above the current trading range. Burry’s thesis rests on a simple conviction: the recent rout in software stocks was driven by technical spillover from private credit markets, not by any fundamental deterioration at PayPal itself. Since the payments giant has no exposure to those markets, he sees it as an isolated opportunity.

That contrarian bet stands in sharp contrast to the mood on the Street. The analyst community remains deeply divided, and the tone has turned more cautious in recent days. Mizuho delivered the most striking blow, downgrading PayPal from “Outperform” to “Neutral” and slashing its price target from $60 to $50. The catalyst: Elon Musk’s looming launch of X Money, a financial layer embedded within the X platform. Mizuho sees PayPal and its Venmo unit as the most exposed targets, arguing that X Money’s model — a WeChat Pay-style blend of messaging, payments, and commerce — directly threatens the company’s peer-to-peer and digital wallet franchises. The bank cut its growth forecasts for Venmo and PayPal’s core checkout business accordingly.

BMO Capital Markets kicked off the latest wave of analyst moves with an initiation at “Market Perform” and a $52 target. The firm pointed to the company’s third CEO in as many years and intensifying competition from Apple Pay, Shopify, and Stripe. Cantor Fitzgerald followed with a target raise to $54 but kept a “Neutral” rating, citing a solid consumer backdrop that could support the upcoming results. Across the broader analyst universe, the numbers tell a stark story: of 45 analysts covering the stock, only seven recommend buying, 32 advise holding, and six say sell. That is hardly a vote of confidence.

Should investors sell immediately? Or is it worth buying PayPal?

The skepticism is rooted in recent history. In February, shares cratered more than 20% in a single session after weak earnings and the departure of CEO Alex Chriss. Enrique Lores, the former board chairman known for operational rigor, took the helm in March. He now faces his first real test on May 5, when PayPal reports first-quarter results before the market opens. Analysts expect diluted earnings per share of $1.27, a decline of 4.5% from the year-ago period. The focus will be on payment volume trends, margin expansion, and whether Lores can deliver on management’s forecast for modest growth in the branded checkout business.

Despite the bearish backdrop, the stock has shown signs of life. Over the past 30 days, shares have climbed roughly 12%, trading around €43.10 (approximately $43.52). That still leaves them down about 13% year-to-date and well below the 200-day moving average. Rumors of a potential activist investor entry have provided additional support in recent weeks. The valuation, meanwhile, is hard to ignore: the price-to-earnings ratio of 9.05 sits far below the S&P 500 average, a metric that occasionally lures value hunters like Burry.

The May 5 earnings call will also test whether PayPal’s capital return program can offset the growing shadow of X Money. Management has guided for at least $6 billion in free cash flow this year, with share buybacks of a similar magnitude. Whether that firepower is enough to reassure investors — and whether Lores can steady a ship that has changed captains three times in as many years — will determine if Burry’s contrarian wager proves prescient or premature.