PayPal posts strong Q1 revenue growth but sees profit dip; shares remain undervalued with buyback and dividend moves.

PayPal reported Q1 2026 revenue of $8.35 billion, up 7.2% year-over-year, driven by record active accounts and payment volumes. Despite this growth, profitability declined due to higher transaction costs and investment impairments. Management is responding with aggressive share buybacks and initiating a dividend, signaling confidence in the company's long-term value. The stock remains attractively priced, leading to a reaffirmed 'strong buy' rating based on its market leadership and growth potential despite short-term earnings pressure.