PayPal’s New CEO Faces a Divided Investor Base Ahead of First Earnings Test

New CEO Enrique Lores delivers first PayPal earnings on May 5 as branded checkout stalls, institutional investors flee, and the stock trades at a cheap P/E of 9.3.

Enrique Lores has been in the CEO seat at PayPal for just two months, but the pressure is already mounting. The former HP executive, who took over from Alex Chriss in early March, will deliver his first quarterly earnings report on May 5 — a moment that could set the tone for the rest of the year. The stock closed Friday at €42.72, down roughly 14% year-to-date, and the market is watching closely for signs of a turnaround.

Institutional Investors Are Voting With Their Feet

The divergence in sentiment among big money managers is stark. M&T Bank saw the current price level as an opportunity, snapping up nearly 100,000 shares. But the sellers are winning the numbers game. Munich Re trimmed its position over the weekend, and UBS Asset Management had previously offloaded more than 21 million shares. In the last quarter, over 1,000 institutional investors reduced their stakes, while only around 650 added to theirs.

Short sellers, however, are showing signs of retreat. The short interest has edged lower recently, suggesting the downward momentum may be losing steam. The stock has climbed more than 13% over the past 30 days and is now trading back above its 50-day moving average — a technical improvement that offers some relief, even if the year-to-date losses remain in double digits.

The Core Problem: Branded Checkout Stagnation

The biggest headache for Lores is the branded checkout segment, PayPal’s most profitable business line. In the fourth quarter of 2025, it grew by only about 1%, weighed down by competitive pressure and sluggish e-commerce demand. That segment accounts for more than half of the company’s profits, making its trajectory the single most important metric in the upcoming report.

Management has guided for modest improvement in 2026, with branded checkout growth expected to range from slightly positive to low single digits. For the first quarter, analysts forecast revenue growth in the low single digits on a currency-adjusted basis. Consensus estimates call for diluted earnings per share of $1.27, a decline of roughly 4.5% from the same quarter last year.

Analyst Consensus: Hold, With Little Conviction

Wall Street remains cautious. Of the 26 analysts covering PayPal, 62% rate the stock a “Hold” — a lukewarm endorsement that reflects the uncertainty. Truist Securities analyst Matthew Coad raised his price target to $45 on Friday but kept a sell rating, arguing that while the U.S. consumer environment is “broadly positive,” the stock is still too expensive. BMO Capital has a $52 target, while Bank of America lifted its target to $55 with a neutral stance. Cantor Fitzgerald also maintains a neutral rating with a $54 target.

The valuation is historically cheap. PayPal’s price-to-earnings ratio stands at just 9.3, well below the industry average. Mizuho analysts point to fierce competition in both merchant and consumer payments as a drag on growth. The number of transactions per active account fell 5% in the most recent period — a red flag that investors want to see reversed.

Macro Headwinds and a $6 Billion Buyback

PayPal’s heavy reliance on e-commerce makes it more vulnerable than many rivals to any slowdown in consumer spending, particularly if U.S. tariffs begin to bite. Payment processors earn a percentage of transaction volume, meaning fewer and smaller purchases hit them directly.

On the flip side, the company has a massive capital return program in place. PayPal plans to buy back roughly $6 billion worth of its own shares in 2026, equivalent to about 14% of its current market capitalization. Free cash flow is expected to match or exceed that figure. The buyback will boost per-share earnings metrics, but it doesn’t address the strategic questions about growth.

What Lores Needs to Deliver on May 5

The board brought in Lores from HP because the pace of change under his predecessor wasn’t meeting expectations. On May 5, investors will get their first look at whether the new CEO can articulate a clearer growth story — particularly around Venmo, checkout upgrades, and overall payment volume.

The next major milestone after earnings is the virtual annual general meeting on May 19, 2026, where shareholders will vote on a new compensation plan and formally confirm the new leadership structure. Lores will need to present concrete solutions for the declining transaction throughput by then.

The stock remains about 30% above its 52-week low from February, leaving limited room for disappointment. With a divided investor base, a skeptical analyst community, and a core business under pressure, Lores has little margin for error in his first earnings outing.