Paypal Tanks After Earnings Miss: Could Elon Musk’s X Be The Lifeline?

PayPal (NASDAQ:PYPL) shares are falling 18% in morning trading today after the company reported fourth-quarter earnings that missed expectations. Adjusted earnings came in at $1.23 per share, below the $1.29 consensus estimate, while revenue reached $8.68 billion against forecasts of $8.79 billion. 

The shortfall stemmed from softer consumer spending and slower growth in its branded checkout business, which rose just 1% year-over-year. For 2026, PayPal guided for adjusted profit to decline in the low single digits or be slightly positive, well under the 8% growth analysts expected. 

Elon Musk, who merged his X.com with Confinity in 2000 to form PayPal, sold it to eBay (NASDAQ:EBAY) for $1.5 billion in 2002. Musk later founded Tesla (NASDAQ:TSLA) and SpaceX, and in 2022 acquired Twitter, rebranding it as X using the X.com domain he repurchased. Considering PayPal’s current struggles, could Musk reacquire it to integrate into his “everything app” ambitions for X.

Musk’s Push for an All-in-One Platform

Elon Musk has outlined plans to evolve X into an “everything app” similar to China’s WeChat, combining social media, messaging, payments, e-commerce, and other services into one platform. X is advancing this vision through incremental feature additions. 

In November, Musk announced the rollout of encrypted messaging, audio/video calls, and file transfers via a new communications stack, with X Money payments set to launch soon after. X’s then-CEO Linda Yaccarino stated in January 2025 that the platform would introduce financial services as its first major “everything app” milestone that year, including peer-to-peer payments and in-app trading. 

Partnerships, such as with Visa (NYSE:V) for digital wallets, support these efforts. Musk’s original 2022 investor presentation called for X to have a projected 600 million monthly active users by 2025 and revenue diversification, with half from subscriptions, though actual subscription intake has lagged projections. By 2026, X has secured money transmitter licenses in multiple U.S. states to enable payments, building these capabilities directly on the platform rather than through acquisitions.

X’s Ground-Up Approach

Musk is constructing X’s features internally, starting with core social elements and layering on utilities. So far, X has integrated Grok AI for enhanced search and content moderation, while expanding into video streaming and job listings. The platform’s evolution includes plans for ride-hailing and smart home integrations, though these remain in early stages. Last June, reports indicated X would add investment and trading functionalities directly, bypassing external partnerships for core tech. 

This approach allows unified development under Musk’s oversight, with X’s user base reported at 561 million active monthly users, providing a foundation for monetization. Musk has emphasized replicating WeChat’s model, where users handle messaging, payments, and shopping without switching apps, and X’s updates reflect this integrated build strategy.

Would Acquiring PayPal Accelerate Progress?

PayPal’s established payment infrastructure processes billions in transactions annually, with 439 million active accounts just reported, a 1.1% increase year-over-year. Integrating it could provide X with ready-made payment rails, potentially speeding up Musk’s timeline for financial services. 

However, X is already developing its own payment system, having obtained licenses and built features like X Money from the ground up. Merging PayPal would involve reconciling different tech stacks — PayPal’s legacy systems versus X’s modern architecture — which could demand extensive retooling. Musk’s history shows preference for internal builds, as seen in X’s independent expansion into calls and transfers. Building from scratch ensures it remains in alignment with X’s AI-driven ecosystem, including Grok, seemingly making it more efficient than retrofitting PayPal’s operations.

PayPal’s market capitalization stands at $39 billion, following its earnings-related drop, a 54% decline from last year. An acquisition would also likely require a premium, pushing costs to $50 billion or more, similar to Musk’s $44 billion Twitter purchase. As PayPal carries almost $13.5 billion in long-term debt and other long-term liabilities, it would add to the financial burden. 

While Musk’s resources — bolstered by Tesla’s valuation and recent mergers — could cover this, integration expenses for tech and regulatory compliance would increase total outlay.

Key Takeaway

The likelihood of Musk acquiring PayPal appears low. Despite Musk’s penchant for making acquisitions and his substantial financial resources, his preference for internal development suggests his priorities lie elsewhere.

Although PayPal investors might welcome him as a savior, they will have to rely upon their new CEO and hope for an economic rebound to see any recovery.

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