TLDR
- PayPal (PYPL) stock dropped 17-19% after replacing CEO Alex Chriss with HP’s Enrique Lores, effective March 1, 2026
- The company issued weak 2026 profit guidance, expecting low-single-digit decline to slight increase versus Wall Street’s 8% growth expectations
- Fourth-quarter revenue missed estimates at $8.68 billion versus expected $8.80 billion, with adjusted earnings of $1.23 per share below the $1.28 forecast
- Online branded checkout growth slowed sharply to just 1% in Q4 compared to 6% the previous year, driven by weak U.S. retail and international pressures
- The board stated Chriss’s pace of change and execution didn’t meet expectations as the company faces intense competition from Big Tech and fintech rivals
PayPal replaced CEO Alex Chriss on Tuesday while simultaneously delivering disappointing financial results and a weak 2026 outlook. The double blow sent shares tumbling more than 17% in premarket trading.
The payments giant’s board appointed HP’s Enrique Lores as president and CEO, effective March 1. Chief Financial Officer Jamie Miller will serve as interim CEO until then.
The board said Chriss’s pace of change and execution fell short of expectations. He had been brought in to navigate slowing post-pandemic transaction volumes and rising competition from both Big Tech firms and newer fintech companies.
Lores spent more than six years as president and CEO at consumer electronics maker HP. Wall Street analysts immediately questioned whether he would bring in a payments-focused team for another turnaround attempt or explore strategic asset sales.
Weak Guidance Misses Expectations
PayPal expects full-year 2026 adjusted profit to decline in the low-single-digit percentage range or increase slightly. This forecast sharply missed Wall Street’s expectation of roughly 8% growth, according to LSEG data.
Miller said the company would no longer commit to the specific 2027 outlook presented at last year’s investor day. PayPal will now provide forecasts one year at a time.
The holiday quarter results disappointed across the board. Revenue reached $8.68 billion, missing the $8.80 billion estimate. Total payment volumes rose 6% on a currency-neutral basis to $475.1 billion.
Adjusted earnings came in at $1.23 per share for the three months ended December 31. Analysts had expected $1.28 per share. The miss was particularly striking given that payments firms typically see stronger spending during the holiday season.
Branded Checkout Momentum Stalls
Online branded checkout growth decelerated sharply to just 1% in the fourth quarter. This compared to 6% growth in the same period a year earlier.
PayPal blamed weakness in U.S. retail, international headwinds, and tougher year-over-year comparisons. Growing this higher-margin business had been a key priority for Chriss, who pushed for “profitable growth” while cutting costs tied to unbranded processing.
Miller pointed to pressure across the retail merchant portfolio during a conference call with analysts. She specifically noted struggles among lower and middle-income consumers.
“While part of this can be attributed to macro factors and a K-shaped economy, it’s also clear that we need to do more to win with key merchants, particularly during high-volume shopping periods,” Miller said. The company announced it was taking near-term action to restore momentum in online branded checkout.
Executives acknowledged seeing “constructive indicators” but couldn’t provide a precise timeframe for when PayPal would reach an inflection point. Retail spending has softened as shoppers navigate elevated interest rates and high living costs. Signs of a softening labor market have pushed consumers to cut discretionary purchases and focus on necessities.
Major retailers and consumer goods companies have flagged this trend as households manage tighter budgets. Investors have long worried about Big Tech companies like Apple and Google entering PayPal’s core payments business. These concerns have pressured the stock in recent years despite PayPal’s position as the legacy market leader.
The company maintains it continues performing well in core products despite rising competition. However, investors closely monitor branded checkout results as a key indicator of the business’s health.
Lores takes over at a critical juncture for the payments firm. Evercore ISI analysts suggested the CEO change raises questions about the company’s turnaround strategy going forward.
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