"Copy WeChat Pay and Alipay": what Musk's new payment service threatens PayPal with

Mizuho analyst Dan Dolev, who has been advising to buy PayPal shares for two years, downgraded them to Neutral due to risks from Elon Musk's new fintech service X Money, MarketWatch writes. X Money is a digital wallet and payment platform integrated into the X social network, which Dolev estimates has "the potential to change the payments market in the United States."

Dolev lowered the target price of PayPal shares from $60 to $50 and recommended to hold them amid expectations of the launch of payment service X Money from Elon Musk. The analyst's target almost coincides with the price of securities at the last closing - $49.8.

X Money is expected to come out of beta testing as early as April. The service is part of Musk's strategy to turn X into a super app similar to China's WeChat. Musk also merged X, AI startup xAI and SpaceX into a single entity in February in preparation for an IPO.

"Musk's strategy seems obvious: copy the models of WeChat Pay and Alipay (Chinese payment systems - OnInvest's note), where communication and commerce are combined in one interface and payments become a standard action within the feed," said the Mizuho analyst.

On April 17, PayPal's shares rose by 1.7%. Since the beginning of the year, they are down 13%.

Elon Musk's X Money has a wider audience reach than PayPal and Venmo, a payment service with social features, Dolev said. While Venmo processed $330 billion in transactions in 2025 with about 100 million active users, X's audience is between 500 million and 600 million monthly active users worldwide, the analyst said. He estimated that even a "moderate" conversion of such a base could create a "substantial" revenue stream from P2P payments.

In addition, integrating payments directly into X opens the door to embedded social commerce, which can bypass traditional online payment mechanisms, Dolev points out. This, according to the analyst, is capable of pulling away part of the turnover from PayPal's "key asset" - the branded payment button - and negatively affect the economics of this segment, which forms a significant share of the company's profits.

The emergence of new fintech services, including X Money, comes amid a slowdown in PayPal's annual revenue growth rates: they have been declining for five years through 2025. They are expected to continue slowing this year, leaving PayPal less able to counter threats like X Money, MarketWatch notes.

While analyst Mizuho doesn't expect Musk to have a significant impact on PayPal in the short term, increased competition, in his view, worsens the "already mixed outlook," limiting the upside potential of investor sentiment and the company's valuation.

Beta participants reportedly report that users can transfer funds to deposit accounts within X with a yield of about 6% annually, as well as receive up to 3% cashback on select purchases, MarketWatch writes.

In addition, as noted by program participants, the service includes a number of additional features: direct payroll deposit, wire transfers, checks, ATM withdrawals, cash deposits and P2P payments within the social network.

Meanwhile, X also partnered with Visa in January 2025, which Dolev estimated could be one of the beneficiaries of the X Money service in the short term. Mastercard could also benefit if X connects a second network through the Mastercard Send service to expand its reach, he added.

In addition, Dolev said X Money may try to increase transactions through the use of digital stablecoins.

A part of investors, on the contrary, bets on growth of PayPal securities. Michael Burry, known for the movie "Downgrade", on April 15 reported that he opened a new position in PayPal shares, directing about 3.5% of the portfolio to it.

He said the investment is linked to the expectation of a rebound in the sector after a sell-off amid the hype around AI: in its internal rankings, PayPal is "near the top" among software and payments companies.

Of the 45 analysts that cover PayPal stock, the majority - 31 - of them are

recommend holding them in a portfolio. 10 recommend buying them and five recommend selling them.

This article was AI-translated and verified by a human editor