The U.K. Financial Conduct Authority (FCA) has launched a competition-based probe on digital wallet funding and usage practices involving PayPal (PYPL), Mastercard (MA), and Visa (V). The investigation comes after a long decline in PYPL’s price, adding fresh legal pressure on the stock, which has fallen over 34% in the past year.
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Meanwhile, an analyst at Macquarie (MQG) has downgraded their price target for PYPL following the probe. The new investigation further adds to the rising concerns around PayPal’s stock, as investors maintain a cautious outlook.
FCA Probe Puts PayPal’s U.K. Wallet Business Under Pressure
The FCA is looking into whether the practices of PayPal, Mastercard, and Visa could be hurting competition in the U.K. payments market. Regulators are reviewing how people fund and use digital wallets, as well as the ties between payment apps and major card networks.
The investigation will also examine how PayPal connects its digital wallet to cards and bank accounts in one of its key global markets. The results could lead to anything from small operating charges to bigger shifts involving fees and payment routing. It may also impact how PayPal’s wallet works in the U.K. and possibly across Europe.
The review matters as digital wallets play a crucial role in online and cross-border payments. As the new probe continues, PYPL investors are watching to see whether any FCA actions could affect PayPal’s services in the U.K. or its alliance with Visa and Mastercard.
The investigation adds to the company’s growing challenges. PayPal recently reported its Q1 2026 net income of $1.11 billion, crossing experts’ estimates of $1.04 billion. However, investors remained unimpressed, triggering a more than 10% crash in the stock on May 5.
Macquarie Cuts PYPL Target as Investors Reassess Outlook
On May 7, Macquarie analyst Paul Golding slashed his price target for PYPL from $58 to $50 and downgraded his position to Hold. While the move shows less confidence in the stock, his new target still sits about 11% above PYPL’s current price near $45. This suggests he no longer sees the stock as a Buy.
Notably, PayPal shares fell to $45 after the company reported solid earnings. The stock has declined by about 30% over the past six months and more than 20% year-to-date. This poor performance is due to slow growth, lower profits, and stronger competition in the payments market.
During its earnings call, the company reported $8.4 billion in revenue, up 7% from last year. Its adjusted earnings per share (EPS) rose slightly to $1.34, while its payment volume also grew 11% to $464 billion. Even with those numbers, investors are more focused on a weaker growth outlook and shrinking margins.
The management claimed that higher costs in tech, marketing, and product work are pressuring results. They also warned that earnings per share could drop by 9% in Q2 due to heavy spending and lack of one-time benefits from last year.
The company’s international results are also weak. Revenue outside the U.S. grew just 4% and was flat when adjusted for currency. This adds to concerns about the company’s global growth as competition surges from other payment providers such as Apple (AAPL), Google (GOOGL), Visa, and Mastercard.
Is PYPL a Good Investment Now?
Wall Street analysts rate PayPal (PYPL) as Hold, based on TipRanks consensus data. They project a downside potential of 7.85% and an average price target of $49.32 for the stock. The bearish forecast reflects caution amongst analysts as they await more growth signals from PayPal. For more information on this stock’s performance, rating, and price target, visit the TipRanks Stocks Comparison Center.
