PayPal plunges 20% on weak earnings, guidance
CEO Alex Chriss departs as payments giant forecasts EPS decline amid market share losses to Apple Pay, Stripe
PayPal Holdings shares plunged 20.3% to $41.70 on Tuesday, marking the stock's lowest level since 2017, after the digital payments company reported disappointing fourth-quarter earnings and issued weak guidance for 2026. The steep decline erased approximately $9.97 billion in market capitalization, leaving the company valued at roughly $50 billion.
The payments giant reported adjusted earnings per share of $1.23 for the fourth quarter, falling short of analyst expectations of $1.29. Revenue reached $8.68 billion, missing forecasts that ranged from $8.79 billion to $8.82 billion. The shortfall underscores mounting competitive pressures in the payments sector, with analysts pointing to market share losses in PayPal's branded checkout offerings against rivals including Apple Pay and Stripe.
More concerning for investors was the company's forward guidance. PayPal anticipates non-GAAP earnings per share for full-year 2026 will range from a low-single-digit decline to slightly positive—well below analyst estimates. The company also expects a mid-single-digit decline in non-GAAP EPS for the first quarter of 2026 and a slight decline in transaction margin dollars for the year.
Adding to investor uncertainty, PayPal announced an immediate leadership transition. Chief Executive Officer Alex Chriss is departing the company, with Enrique Lores, a veteran from HP Inc., set to assume the roles of President and CEO starting March 1. The abrupt executive change comes as the company faces intensifying competitive dynamics in the digital payments landscape.
Trading volume surged to 141.3 million shares, more than five times the daily average, as institutional and retail investors rushed to exit positions. The stock's relative strength index dropped to 31.34, indicating oversold conditions and suggesting the sell-off may have been exacerbated by technical factors.
Despite the dramatic decline, Wall Street analysts maintain a relatively bullish outlook on the shares. The consensus price target stands at $70.36, representing approximately 68.7% upside from current levels. Of 45 analysts covering the stock, 13 rate it a buy or strong buy, while 27 recommend holding and five suggest selling.
PayPal's struggles reflect broader challenges facing fintech companies as traditional financial institutions and big tech players encroach on digital payments territory. Apple Pay has gained significant traction in point-of-sale transactions, while Stripe's merchant services have attracted growing e-commerce businesses seeking integrated payment solutions.
The company's forward price-to-earnings ratio now stands at 9.17, well below its historical averages, suggesting investors are pricing in substantial execution risk. PayPal's price-to-sales ratio of 1.52 times trailing revenue also reflects heightened concerns about growth prospects.
Looking ahead, investors will focus on Lores' strategic vision for reversing market share losses and whether the new CEO can stabilize margins while investing in product innovation. The company's ability to compete effectively in an increasingly crowded digital payments market will be critical to restoring investor confidence.
The dramatic selloff highlights the volatility in fintech stocks and the premium investors place on consistent earnings growth and credible guidance in a sector facing technological disruption and intense competition.