Leadership Shakeup and Subdued Forecasts Weigh on PayPal’s Prospects

PayPal US70450Y1038

A triple dose of disappointing news this week has unsettled investors in PayPal, sending its shares sharply lower. The digital payments giant reported quarterly results that fell short of targets, issued a cautious outlook that significantly undershot expectations, and announced a surprise change in its chief executive. This confluence of events has raised questions about the company's strategic direction at a pivotal time.

Operational results for the fourth quarter of 2025 failed to meet analyst projections, compounding existing market concerns about momentum in PayPal's core business.

Key quarterly figures included:
* Revenue: $8.68 billion, below the expected $8.80 billion.
* Adjusted Earnings Per Share (EPS): $1.23, missing the $1.28 forecast.
* Active Accounts: 439 million, a 1% increase year-over-year.
* Payment Transactions: 6.8 billion, up 2% from the prior year.

While user and transaction growth persists, the pace has slowed to a virtual crawl, highlighting the competitive and operational challenges the company faces.

Guidance and Strategic Clarity Become Major Concerns

Perhaps more damaging than the quarterly miss was management's tempered view of the future. For the 2026 fiscal year, PayPal projected adjusted profit would range from a low single-digit percentage decline to a slight increase. This guidance stands in stark contrast to market expectations, which had been anticipating growth of approximately 8%, according to data from LSEG.

Adding to the uncertainty, CFO Jamie Miller retracted the reliability of previous long-term targets. The company will no longer commit to the specific 2027 outlook provided at last year's Investor Day, opting instead to issue forecasts only one year in advance.

A significant area of weakness was growth in branded online checkout—where PayPal's button appears at merchants' digital points of sale. This segment, a focal point for the outgoing CEO, cooled dramatically to just 1% growth in the quarter, down from 6% a year earlier. Analysts cited a combination of U.S. retail headwinds, international pressures, and tougher year-over-year comparisons for the slowdown.

Miller also acknowledged pressure within PayPal's merchant portfolio, particularly from consumers with low to middle incomes. She conceded the need for improvement with key merchants, especially during high-volume shopping periods.

Unexpected CEO Transition Adds to Turbulence

Amid these operational challenges, the Board of Directors has replaced CEO Alex Chriss. Reports indicate the board was dissatisfied with the pace and execution of his strategy. This move is notable given that Chriss was initially brought on to navigate PayPal through a period of slower growth and intensifying competition.

Enrique Lores, currently the CEO of HP, has been named the new President and CEO, effective March 1. CFO Jamie Miller will serve as Acting CEO in the interim. The leadership change was poorly received on Wall Street, with analysts from Evercore ISI emphasizing that the critical question is whether Lores will build a strong payments team to drive a multi-year turnaround or explore strategic options for parts of the business.

The company operates in an increasingly competitive landscape, with tech giants like Apple and Google making deeper inroads into the payments sector, fueling fears of gradual market share erosion. PayPal has announced near-term measures to reinvigorate its checkout business but has not provided a clear timeline for a tangible turnaround.

The shift in sentiment is already reflected in the share price. The stock closed yesterday at €36.04 and has declined -18.71% over the past seven trading days. All eyes are now on March 1, when Enrique Lores officially takes the helm. The market will be watching closely for concrete steps to restore predictable growth in checkout volume and overall profitability.