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PayPal Is Back Near IPO-Era Prices—Value Setup or Value Trap?
Submitted by Sam Quirke. First Published: 2/20/2026.
Key Points
- PayPal’s drawdown has pushed valuation and technical indicators to extremes, setting up a potential contrarian opportunity.
- The bull case rests on durable profitability and a low multiple, while the bear case centers on slowing growth and competitive erosion.
- Leadership transition and any credible strategic reset are positioned as the near-term catalysts that could shift sentiment.
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Having fallen steadily since the summer of 2021, former tech darling PayPal Holdings Inc (NASDAQ: PYPL) is once again testing fresh lows. The stock now trades just above $40, roughly where it debuted publicly more than a decade ago. It's been a rough couple of years for investors.
Yet for those on the sidelines, behind the sell-off sits a number that's hard to ignore. After all the selling, PayPal's price-to-earnings (P/E) ratio has collapsed to 7.67, one of its lowest readings ever. For a $38 billion technology company that still generates billions in annual profit and free cash flow, that multiple looks extraordinarily low. It's not just cheap relative to its pandemic peak; it's cheap relative to its own history and to most of its mega-cap tech peers. The question investors must ask is whether this is a generational value setup or a classic value trap.
Why the Valuation Screams Opportunity
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A single-digit P/E ratio for a profitable tech company is unusual. PayPal is not a pre-revenue startup or a structurally impaired business burning cash. In its most recent quarterly report, revenue grew 3.6% year over year to a record high. The problem is revenue growth has slowed materially from its peak years. Still, the company is growing, profitable, and remains deeply embedded in the global payments ecosystem.
Historically, stocks that fall to single-digit earnings multiples tend to fall into one of two categories: either earnings are about to collapse, or the market has become excessively pessimistic about medium-term prospects.
A Rare Combination: PayPal Hits Extreme Oversold + Deep Value
PayPal's moat has been eroding for years, and its status as the OG of digital payments doesn't carry the weight it once did. Yet at 7.67 times earnings, the market is pricing the company as if growth will remain muted indefinitely. There's a risk that this is an overly negative assumption—especially when the technical setup supports the contrarian case.
PayPal's relative strength index (RSI) recently dipped as low as 12 earlier this month and now sits around 28, still firmly in extremely oversold territory. That is the lowest reading in the stock's history, and combined with a record-low P/E ratio of just 7.67, you see a rare alignment of technical and valuation compression. While this doesn't guarantee an immediate bounce, it signals that both sentiment and valuation have been pushed to extremes.
Why the Market Is Skeptical
Still, the stock's collapse didn't happen in a vacuum. Growth has slowed to near its weakest levels since PayPal became a public company. While its most recent earnings report showed record revenue, the pace of expansion continues to decelerate.
Competitive pressure—especially in branded checkout—has intensified. Apple Pay, Stripe and other fintech competitors have chipped away at parts of PayPal's moat. Meanwhile, investor enthusiasm for AI-driven upside has waned, since the company has yet to convincingly demonstrate how it will meaningfully monetize that opportunity.
Leadership uncertainty adds another layer of risk. The current CEO is being replaced, with a new leader expected to step in next month. While that could become a positive catalyst, it also introduces near-term execution uncertainty. Many analysts remain cautious at these levels, arguing a low multiple is reasonable if growth remains muted and competitive pressures persist.
A Tempting Risk/Reward Profile for PayPal
Even so, the risk/reward setup is hard to ignore. Within a cautious analyst community that carries a consensus Hold rating, there are contrarian voices. Susquehanna and Argus have both reiterated Buy ratings this month, with price targets as high as $65—implying roughly 35% upside from current levels.
Those bullish scenarios don't require a heroic rebound to former highs—just some consolidation and renewed confidence from value investors. When a stock and its valuation have been pummeled this far, the bar for a meaningful recovery isn't very high.
The new CEO could also provide the catalyst investors want: a clear strategic reset, renewed focus on revenue growth, and tangible progress in defending market share could shift sentiment quickly.
PayPal is no longer priced as the growth darling it once was. But when a profitable $38 billion technology company trades at a single-digit P/E, near IPO-era prices, and sits alongside one of the most oversold technical readings in years, it demands attention.
DTE's Stargate Deal Turns Power Into Profits
Submitted by Jeffrey Neal Johnson. First Published: 2/20/2026.
Key Points
- The utility provider exceeded analyst expectations for quarterly earnings and raised its forward guidance, reflecting confidence in its long-term growth.
- A major partnership with leading technology firms to power a new hyperscale data center serves as a transformative catalyst for future capital expansion.
- Shareholders receive a consistent, growing dividend that provides defensive income stability during periods of broader stock market volatility.
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The financial landscape of early 2026 has been defined by a singular, dramatic theme: rotation. As investors flee the speculative froth of the technology sector, capital is finding a new home in the tangible economy. While Silicon Valley frets that software efficiency could compress margins, one physical reality remains unchanged: artificial intelligence (AI) consumes massive amounts of electricity. In this turbulent environment, DTE Energy (NYSE: DTE) has emerged as a defensive shelter and a critical infrastructure partner for the digital age.
On Feb. 17, 2026, the Detroit-based utility delivered a beat-and-raise quarter that quieted skeptics. DTE reported fourth-quarter operating earnings of $1.65 per share, comfortably above the analyst consensus of $1.52. Revenue rose to $4.43 billion, topping expectations of $3.39 billion. The market responded, sending shares up roughly 2.8% on a day when the tech-heavy Nasdaq struggled. For investors tired of chip-stock volatility, DTE suggests a pragmatic way to play AI: invest in the power grid that runs it.
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The centerpiece of the bullish case for DTE is a confirmed agreement to power 100% of the Stargate OpenAI data center campus in Saline Township, Michigan. This is more than a typical commercial contract; it is a partnership with industry names like Oracle (NYSE: ORCL) and OpenAI. The facility will require about 1.4 gigawatts (GW) of power — an immense load roughly comparable to the output of a small nuclear reactor or enough to power roughly one million homes. One customer of that size would boost DTE's total electric load by an estimated 25%.
For investors, the structure of the deal matters most. The agreement includes minimum monthly charges that cover 80% of billing demand. This take-or-pay feature is critical: DTE earns for capacity whether the AI servers are humming or idle. In effect, the contract behaves like a royalty on the AI economy, without the execution risk of picking the winning software model.
The physical build-out underscores the scale of the "Physical AI" trade. Developed by Related Digital, the site will use advanced closed-loop cooling to limit water use and is expected to create more than 2,500 union construction jobs.
Management also said it is in advanced talks for an additional 3 GW of load, suggesting Stargate could be only the opening act of a broader transformation. Unlike peer CMS Energy (NYSE: CMS), which is pursuing a strategy focused on tariffs for smaller data centers, DTE is targeting large, singular projects that move the needle immediately.
Dividends, Earnings, and $36 Billion in Spending
DTE's recent financial updates provide the kind of visibility that uncertain markets prize. Management issued guidance for 2026 projecting operating earnings per share (EPS) of $7.59 to $7.73 — roughly 6% to 8% growth versus the prior year — a rate near the top of the utility sector. Executives said they are confident in hitting the high end of that range, supported in part by tax credits from their Renewable Natural Gas (RNG) business.
To support the infrastructure required by Stargate and the broader energy transition, DTE added $6.5 billion to its five-year capital plan, taking the total to $36.5 billion through 2030. In the regulated-utility model, capital spending drives future profits: utilities are authorized to earn a return on equity (ROE) on investments in the grid. In practical terms, a $36.5 billion spending plan is a roadmap for predictable profit growth — upgrading the grid to handle AI loads increases the rate base that underpins earnings.
Income-focused investors also have reason to stay. The company declared a quarterly dividend of $1.165 per share, an annualized payout of $4.66. With a yield around 3.2% and 16 consecutive years of dividend increases, DTE offers an inflation-resistant income stream that speculative tech names cannot match.
The Wall of Worry: Risks and Reality
No investment is risk-free, and DTE has specific challenges that prospective shareholders should weigh. The most immediate is regulatory friction: Michigan Attorney General Dana Nessel has filed a motion to reopen the approval case for the Stargate contracts. Her objection centers on a change in contract language — DTE moved from wording that explicitly guaranteed data-center payments would cover costs to language referencing aggregate revenues — which Nessel says could allow early-year deficits to be borne by ratepayers.
Her argument is that the change could effectively force residential customers to subsidize infrastructure for Oracle and OpenAI with the promise of repayment in later years. That creates political noise and potential delays, though DTE contends the project will ultimately lower costs for all customers by about $300 million.
Separately, a federal judge recently ordered DTE to pay a $100 million civil penalty over environmental violations at its Zug Island facility. While a nine-figure fine attracts headlines, it should be seen in context: DTE generates roughly $1.5 billion in annual operating earnings, so the penalty is a manageable, one-time hit to liquidity rather than a structural threat.
Finally, timing matters. The One Big Beautiful Bill Act (OBBBA), signed in 2025, requires wind and solar projects to begin construction by July 4, 2026, to qualify for key tax credits. That hard deadline forces precise execution, but it also accelerates asset growth.
A Physical Toll Booth on the Digital Highway
DTE Energy trades at a price-to-earnings ratio (P/E) near 21x. That is a premium versus slower-growing utilities (typically 16x–18x), but it is a significant discount to many AI hardware and software names, which commonly trade at 30x or higher.
The stock offers a hybrid profile well-suited to this market rotation: downside protection from a regulated monopoly and a secure dividend, paired with upside exposure to the largest technological shift in decades. As capital moves away from intangible software promises and toward the hard assets needed to power them, DTE Energy reads like the sober operator in the room. For investors seeking exposure to AI without the vertigo of sky-high valuations, the power grid is a compelling physical hedge.
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