PayPal’s New CEO Faces a Brutal Earnings Debut as the Stock Hits a Decade Low

PayPal stock slumps 27% as new CEO Enrique Lores faces Q1 earnings test. Analysts forecast EPS decline amid competition from Apple Pay and new ad revenue bets.

The numbers tell a stark story. PayPal’s share price has slumped roughly 27% over the past twelve months, hovering around €42. The company’s price-to-earnings ratio has sunk below 10 — a valuation so low it forces a fundamental question: is this a bargain or a value trap?

On May 5, when the payments giant opens its books for the first quarter, investors will get their first real glimpse of whether new CEO Enrique Lores can reverse the slide. The former HP chief took the helm on March 1, becoming the third person to hold the top job in as many years. The board brought him in specifically to accelerate a strategy that has so far failed to impress Wall Street.

Earnings expectations are muted

Analysts forecast earnings per share of $1.27 for Q1, a 4.5% decline from the same period last year. That follows a disappointing fourth quarter, when PayPal missed consensus estimates and flagged flat-to-slightly-lower results for the full year. The February earnings miss triggered a sharp selloff after the company’s core checkout-button business grew just 1%.

The pressure on margins is intensifying from all sides. Apple Pay and Alphabet’s Google Pay are closing the gap rapidly — projections show both services reaching roughly 90 million US users soon, eroding PayPal’s historical lead. Meanwhile, buy-now-pay-later players like Affirm and Klarna are winning over younger demographics, and Elon Musk’s X platform is building its own payments infrastructure.

A new revenue playbook

To counter these threats, PayPal is pushing aggressively into two new areas. The first is social commerce: the company has integrated its payment functions directly into the design platform Canva, allowing users to embed payment links or QR codes into graphics that can be shared across social networks and messaging apps.

The second, and potentially more ambitious, is advertising. PayPal is building an ad network anchored by a new tracking tool called the “PayPal Ads ID,” which leverages real transaction data. With third-party cookies becoming increasingly unreliable, advertisers are desperate for accurate data — and PayPal believes it can fill that gap while creating a fresh revenue stream.

The market remains unconvinced

So far, these initiatives have done little to lift the stock. The shares trade at €42.44, roughly 37% below their 52-week high of €67.50. Year-to-date, the decline stands at about 14%.

Mizuho recently downgraded the stock to “Neutral” and slashed its price target from $60 to $50. The investment bank’s skepticism reflects a broader concern: even if the ad business gains traction, it may not be enough to offset the stagnation in PayPal’s core payments franchise.

A safety net of buybacks

Financially, the company remains solid. Management bought back $6 billion worth of shares last year and plans to match that level of free cash flow in 2024. The current buyback program aims to repurchase roughly 14% of the company’s market capitalization this year, providing a floor for earnings per share even as operating results weaken.

But the real test comes on Tuesday. With 439 million active users, PayPal still commands a massive foundation. The question is whether Lores can defend that base against a rising tide of competitors and monetize it more effectively than his predecessors. If he succeeds, the depressed valuation leaves plenty of room for recovery. If he stumbles, the value-trap narrative will only harden.