PayPal Stock Soars After Stripe's $53 Billion Bid, But Michael Burry Says It's Still 'Too Low'

PayPal shares surged more than 16% on Wednesday after reports that privately held payments company Stripe and private equity firm Advent had offered about $53 billion to acquire the digital payments group, a proposal that immediately sparked debate over whether the bid adequately reflected the company's value.

Among the critics was investor Michael Burry, best known for predicting the 2008 US housing market collapse. In a post published Wednesday on his subscription newsletter, Burry called the reported $60.50-a-share proposal 'simply too low', arguing that any successful takeover would require a higher premium to reflect PayPal's long-term intrinsic value.

Burry Sees Stripe's Move As Only An Opening Shot

Writing in his subscriber newsletter on Wednesday, Burry described the reported offer as 'simply too low' despite saying it validated his long-held view that PayPal trades below its intrinsic value.

'The bid is at 1.21x IV15 and simply too low,' Burry wrote. 'This validates the value in PayPal, and I believe the bid will have to rise.'

Burry argued that the reported price reflected what a minority investor might be willing to pay but did not include an adequate premium for acquiring control of the business.

'A control premium should take any buyout well above IV15, and 21% more is not nearly enough,' he wrote.

Using his own valuation methodology, Burry estimated PayPal's intrinsic value at roughly $75 to $80 a share under one scenario and $110 to $115 a share under another. He said a successful acquisition would likely require an offer closer to $100 a share.

'I am not selling, and I believe it is only an opening bid,' he wrote.

PayPal Shares Rally as Investors Reassess the Offer

PayPal shares climbed more than 16% to around $55 during Wednesday's session following news of the proposal, narrowing but not closing the gap with the reported $60.50 offer price.

Stocks involved in takeover discussions often trade below the proposed acquisition price until investors gain greater confidence that a transaction will be completed.

The remaining discount can reflect uncertainty over regulatory approvals, financing or whether negotiations ultimately lead to a definitive agreement.

The sharp move also indicated that investors were reassessing PayPal's valuation after months of pressure on fintech stocks and growing competition across the digital payments industry.

Stripe's Reported Proposal Would Rank Among the Largest Fintech Deals

The reported bid values PayPal at roughly $53 billion, making it one of the largest potential acquisitions involving a financial technology company.

Stripe, which remains privately held, has expanded from online payment processing into broader financial infrastructure for businesses, while Advent is one of the world's largest private equity firms.

Neither company has publicly confirmed a definitive agreement, and details of the reported proposal remain limited.

Burry Says Control of PayPal Could Unlock More Value

Burry argued that ownership of PayPal would give an acquirer opportunities to improve operations beyond what is available to public shareholders.

'With control over the cash flows, those businesses and the personnel, the new owner will have many levers to increase value and make for a better overall business,' he wrote.

For that reason, he said any successful offer should exceed his estimate of intrinsic value rather than merely matching it.

His comments echoed a principle commonly used in mergers and acquisitions, where buyers often pay a control premium to secure ownership of a company and its future cash flows.

While Burry believes the reported proposal undervalues PayPal, the market's double-digit rally indicated that investors viewed the bid as a significant development after a period in which the company's shares traded well below previous highs.