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The coup happened at cruising altitude.
In the fall of 2000, Elon Musk boarded a flight to Sydney for a long-delayed honeymoon. He was the chief executive of X.com, the online bank he’d founded and then merged with a smaller rival to create the company that would soon rename itself PayPal. Somewhere over the Pacific, his own board voted him out. By the time the plane touched down, the company he built belonged to someone else.
Musk kept his shares and collected roughly $175 million when eBay bought PayPal two years later. He spent the next two decades building rockets and cars, but he never let go of the name. He bought the X.com domain back from PayPal in 2017 for “sentimental” reasons, he said at the time. And when he acquired Twitter, he stamped that same letter on the door.
Now the story has come full circle in a way even Musk probably didn’t account for… call it the PayPal Stripe deal.
Stripe and private equity firm Advent International have put more than $53 billion on the table for PayPal Holdings (PYPL) – a $60.50-per-share offer the board formally rejected at a special meeting on July 20. And here’s the detail the straight-news coverage keeps missing: nobody bids $53 billion for a healthy company at these prices. Stripe and Advent are circling a wounded one.
And that wound is being inflicted by a payments product built by Musk, the man PayPal pushed out just over a quarter-century ago.
Why the PayPal Stripe Deal Is Happening Now
Acquirers chasing a strong business pay up for strength. But this offer reads differently.
PayPal stock has lost more than 25% of its value over the past 12 months. The company that commanded a roughly $360 billion market capitalization at its 2021 peak bottomed near $36 billion earlier this year – a decline of about 80% from the top. The $60.50 bid represents a 28% premium to where shares closed on July 14, which sounds generous until you remember the stock traded near $80 within the past year.
Stripe and Advent aren’t paying a premium for momentum. They’re paying a discount for distress – and hoping the combination of Stripe’s developer-grade infrastructure and PayPal’s 400-million-plus account base adds up to something that can defend itself.
Defend itself against what? That’s the question the M&A coverage is dancing around.
X Money vs. PayPal: What the Numbers Show
The turnaround narrative has been running on fumes for a while. PayPal issued weaker-than-expected 2026 profit guidance in the winter, warned of slowing momentum in its core branded checkout business, and replaced its CEO – installing HP veteran Enrique Lores, who promptly announced plans to cut roughly 20% of the workforce in pursuit of $1.5 billion in savings.
Layoffs, guidance cuts, a new chief executive, and a stock down more than 25% in a year.
Those are the vital signs of a company acquirers buy cheap. And the market knows exactly why…
Wall Street made the connection official in April. Mizuho downgraded PayPal stock from “Outperform” to “Neutral” and cut its price target from $60 to $50.
And the firm didn’t bury the reasoning in euphemism.
Its analysts wrote that PayPal and Venmo face the most direct substitution risk as X targets the same peer-to-peer and wallet entry points – with longer-term risk that native social commerce pressures branded checkout, too.
Read that again. A major sell-side firm looked at PayPal’s competitive position and named Elon Musk’s payments product as the reason to stop recommending PYPL stock. We laid out that same thesis in June, before the downgrade gave it an analyst’s letterhead.
The Yield Gap Driving Depositors Toward X Money
If you want to understand why deposits move, you don’t need a white paper. You need two numbers.
X Money offers users up to 6% APY on balances. The national average savings account rate, per FDIC data, sits at 0.38%.
That’s a gap of more than 15-to-1. A saver parking $10,000 earns about $38 a year at the national average and roughly $600 inside X Money.
Sen. Elizabeth Warren has publicly questioned how Musk funds that yield, and skeptics rightly note that promotional rates rarely last forever.
But as a customer-acquisition weapon, 6% is devastating. And PayPal, which built its empire on frictionless money movement, suddenly finds itself on the wrong side of the friction.
Is X Money a Threat to PayPal? The Scale Problem
Here’s where the math turns bleak for the merger’s defenders.
X counts somewhere between 500 million and 600 million global monthly active users, according to Mizuho analyst Dan Dolev. Venmo has roughly 100 million active accounts. Cash App and Zelle each command user bases well short of X’s reach. Musk doesn’t need to convert his entire audience into depositors… he just needs a single-digit percentage of it to build a deposit-gathering machine larger than anything Venmo has assembled in a decade.
So, consider what this deal actually proposes: bolting Stripe’s merchant infrastructure onto PayPal’s consumer base to create a payments giant with the scale to compete. Even combined, the entity would be defending a user base that X’s raw audience dwarfs. Two legacy players merging to match one Musk product isn’t a show of strength. It’s an admission of how far behind the field has fallen.
PayPal’s Bank Charter Filing Concedes the X Money Threat
If you doubt that PayPal sees the same threat we do, look at what the company filed in December.
PayPal submitted applications to the Utah Department of Financial Institutions and the FDIC to establish PayPal Bank, an industrial loan company that would, among other things, offer interest-bearing, FDIC-insured savings accounts. Strip away the regulatory language and the filing says one thing: PayPal is racing to build the product X Money already shipped.
Companies don’t spend months and months pursuing a bank charter to chase a feature nobody wants. They do it when a competitor has found the customer’s pressure point. Musk found it. PayPal is now standing in line at the regulator’s office trying to catch up.
What to Watch: PayPal’s Rejection and Q2 Earnings
The board’s July 20 rejection resolved the first catalyst – but not the way most headlines suggest. The board called $60.50 inadequate while leaving the door open to a higher number, and Stripe and Advent are reportedly pushing to reach an agreement before the end of July. This is a negotiation, and history says how it ends matters enormously.
The academic record on takeover bids is unusually clear. A 2024 study in Finance Research Letters examined 1,246 failed acquisition offers dating back to 1979 and found that when boards outright reject an offer and stay independent, shares gain about 7% over the following five weeks and hold those gains for years – markets read a firm rejection as conviction in the standalone plan. Older research from the National Bureau of Economic Research found that the most aggressive defenders, companies that even took on debt to stay independent, went on to perform well, because fending off a raider commits management to making the improvements the raider would have made.
The other path is grim. When an offer simply dies – withdrawn, terminated, blocked – the same 2024 research found target shares end up more than 16% below where they traded before the offer arrived. Markets read a fizzled deal as a board without conviction, or as evidence the acquirer found something ugly in diligence.
In other words, this offer is a warning shot. If PayPal’s board comes out swinging (with a credible plan to fight X Money head-on), shareholders have historically been rewarded. If the bid quietly dies on the vine, history suggests the stock pays for it.
The next catalyst arrives July 28, when PayPal reports second-quarter earnings. Investors will be watching for any sign that branded checkout growth is stabilizing. A weak print hands Stripe and Advent leverage. A strong one gives the board its argument for independence.
Either way, the “Musk is winning” thesis will be tested in real time within days.
Bottom Line: Does the PayPal Stripe Deal Actually Beat X Money?
Twenty-six years ago, PayPal’s board decided Elon Musk was the problem. Today, a payments product bearing the name of the company they took from him has driven PayPal’s valuation low enough that a rival and a private equity firm can bid for the whole thing with borrowed money.
The question is whether Stripe’s rails plus PayPal’s accounts equal a genuine counterweight… or whether the merger merely consolidates the losers of a fight X Money has already won.
The yield gap, the scale gap, and PayPal’s own bank charter filing all point the same direction. Combining two companies that lack an answer to 6% yields and 500 million users doesn’t manufacture an answer. It just makes the lack of one all the more noticeable.
The board rejected $60.50. What it can’t reject is the reason the offer was made in the first place.
Editor’s Note: Tesla made millionaires. SpaceX could make billionaires. And Luke Lango says Elon’s next move … a takeover of the entire global financial system… could be bigger than both combined. The analyst who ranked No. 1 out of 15,000 financial experts in 20202is giving away his top pick to get started, free, right here.
PayPal Stripe Deal FAQ
What is the PayPal Stripe deal?
Stripe and private equity firm Advent International offered $53 billion, or $60.50 per share, to buy PayPal. PayPal’s board rejected the offer as inadequate at a special meeting on July 20.
Why did PayPal reject the offer?
The board called $60.50 per share too low, even though it was a 28% premium over PayPal’s July 14 closing price. Shares had traded near $80 within the past year. Stripe and Advent are reportedly still pushing to reach an agreement before the end of July.
Why is PayPal a takeover target right now?
PayPal stock has lost more than 25% of its value over the past year and fell as low as roughly $36 billion earlier this year, an 80% drop from its 2021 peak of about $360 billion. The company also issued weak 2026 profit guidance, replaced its CEO, and announced plans to cut about 20% of its workforce.
How is Elon Musk’s X Money connected to PayPal’s decline?
Mizuho downgraded PayPal from “Outperform” to “Neutral” in April, citing X Money as a direct substitution risk to PayPal and Venmo’s core business. X Money offers users up to 6% APY, compared to the 0.38% national average savings rate.
How many users does X Money have compared to PayPal?
X counts an estimated 500 million to 600 million global monthly active users, according to Mizuho analyst Dan Dolev, compared to PayPal’s more than 400 million total accounts.
Is PayPal trying to compete with X Money directly?
Yes. PayPal filed applications with the Utah Department of Financial Institutions and the FDIC in December to establish PayPal Bank, an industrial loan company that would offer interest-bearing, FDIC-insured savings accounts, a product X Money already offers.
What’s the next catalyst for PayPal stock?
PayPal reports second-quarter earnings on July 28. Investors will be watching for signs that the company’s branded checkout business is stabilizing.
