PayPal shares plunge 16% on earnings miss, CEO ouster
Payments giant names HP's Enrique Lores to replace Alex Chriss amid weak 2026 outlook
PayPal Holdings shares plummeted more than 16% in pre-market trading Tuesday after the payments giant reported disappointing fourth-quarter results and announced a surprise leadership change, replacing Chief Executive Officer Alex Chriss with Enrique Lores, the current head of HP Inc.
The San Jose-based company reported adjusted earnings of $1.23 per share for the fourth quarter, missing analyst estimates of $1.29 per share. Revenue came in at $8.68 billion, falling short of the projected $8.79 billion. Most alarmingly, PayPal's core branded checkout business grew just 1%, signaling persistent challenges in the company's most critical operation.
The earnings miss was accompanied by a stunningly weak 2026 forecast, with PayPal projecting adjusted earnings to decline by a low-single-digit percentage to increase only slightly, dramatically below Wall Street's expectation of approximately 8% growth or earnings per share of $5.74-$5.75.
In a statement announcing the CEO transition, PayPal's Board of Directors said it determined that "the pace of change and execution over the past two years did not meet their expectations." The board has been evaluating PayPal's strategy and leadership in recent months amid mounting pressure from investors dissatisfied with the company's performance under Chriss, who took the helm in September 2023.
Lores, who has served on PayPal's board for nearly five years and as its chair since July 2024, will assume the CEO role on March 1. In the interim, Jamie Miller, PayPal's chief financial and operating officer, will serve as acting chief executive. Lores brings more than 35 years of experience at HP, where he rose from an engineering intern in 1989 to become CEO in November 2019.
The board's decision to appoint Lores reflects its belief that his experience leading complex corporate transformations—including HP's separation into two companies in 2015—will be crucial as PayPal navigates an increasingly competitive digital payments landscape. However, investors immediately questioned whether a leader from the PC and printing industry can successfully reinvent a payments platform struggling against fintech upstarts and established rivals alike.
The dramatic stock decline compounds PayPal's already difficult stretch. The shares have fallen more than 40% from their 52-week high of $89.50, reflecting broader concerns about the company's growth prospects and ability to compete against newer fintech competitors. Even before Tuesday's plunge, the stock was trading near its 52-week low of $52.06.
Analysts responded swiftly to the dual announcements. MarketWatch reported that the market's reaction signaled "a clear vote of no confidence" in PayPal's direction, with particular concern about whether the 2026 outlook suggests a more prolonged slowdown than investors had anticipated.
The current analyst consensus remains at Hold, with 25 analysts rating PayPal a Hold versus 10 at Buy and 4 at Sell, according to recent data. The average price target stands at $70.36—well above Tuesday's pre-market price, suggesting analysts may need to reassess their expectations following the guidance cut.
PayPal's challenges stem from multiple fronts. The core branded checkout business, which generates the bulk of the company's revenue, has faced slowing growth as merchants increasingly adopt alternative payment methods. At the same time, the company's Venmo peer-to-peer payment platform has struggled to generate meaningful profits, while competition from Apple Pay, Google Pay, and buy-now-pay-later services has intensified across all segments.
The 1% growth in branded checkout represents a particularly stark deterioration from PayPal's historical performance and suggests that Chriss's strategy to revitalize the core business through product innovation and merchant partnerships has yet to gain meaningful traction.
Lores faces a formidable task in reversing PayPal's fortunes. His tenure at HP was marked by cost-cutting initiatives and a strategic shift toward services and subscription revenue, a playbook he may attempt to replicate at PayPal. However, the digital payments industry's faster growth trajectory and competitive dynamics present a fundamentally different challenge than the PC and printing markets.
The leadership shakeup comes at a critical juncture for PayPal, which once dominated online payments but has seen its market position eroded. The company's market capitalization stands at approximately $50 billion, a fraction of the valuation it commanded during the pandemic e-commerce boom.
Investors will be watching closely for Lores's first strategic moves after assuming the CEO role in March, particularly any announcements regarding cost reductions, product initiatives, or potential portfolio changes. The dramatic pre-market sell-off suggests shareholders remain skeptical that a leadership change alone can address PayPal's fundamental growth challenges without significant operational restructuring.
For now, the disappointing earnings report and unexpected CEO transition have reinforced concerns about PayPal's trajectory in a rapidly evolving fintech landscape, raising questions about whether the once-dominant payments pioneer can regain its competitive footing.