Quick Read
- PayPal shares dropped over 17% in premarket trading on Tuesday.
- The company reported Q4 2025 revenue of $8.68 billion and adjusted profit of $1.23 per share, both below analyst estimates.
- PayPal issued a weak 2026 profit forecast, expecting low-single-digit decline or slight increase, against Wall Street’s 8% growth expectation.
- Enrique Lores, HP’s CEO, was named PayPal’s new president and CEO, replacing Alex Chriss, effective March 1.
- Growth in PayPal’s higher-margin branded checkout business decelerated to 1% in Q4, down from 6% a year prior.
NEW YORK (Azat TV) – PayPal Holdings Inc. shares plummeted more than 17% in premarket trading on Tuesday after the digital payments giant reported fourth-quarter earnings below Wall Street expectations and issued a weaker-than-anticipated profit forecast for 2026. The significant market reaction also followed the announcement that HP’s Enrique Lores would take over as president and CEO, replacing Alex Chriss.
The company’s board cited the ‘pace of change and execution’ under outgoing CEO Alex Chriss as not aligning with its expectations. Chriss had been at the helm during a challenging period marked by declining post-pandemic trading volumes and intensified competition from both established technology firms and emerging fintech rivals.
PayPal Stock Plummets Amid Weak Forecast
PayPal’s financial performance for the quarter ending December 31 fell short of analyst projections. The company reported revenue of $8.68 billion, missing the LSEG estimate of $8.80 billion. Adjusted profit stood at $1.23 per share, also below analysts’ view of $1.28 per share.
Even more concerning for investors was the outlook for the current fiscal year. PayPal expects its full-year adjusted profit for 2026 to either decline in the low-single-digit percentage or increase only slightly. This contrasts sharply with Wall Street’s consensus expectation of approximately 8% growth, according to LSEG data. This forecast signals a challenging year ahead, contributing significantly to the sharp decline in its stock value.
Total payment volumes (TPV) showed a 6% rise on an FX-neutral basis, reaching $475.1 billion. However, this growth was overshadowed by the broader financial misses and the cautious outlook.
Leadership Change at PayPal: Enrique Lores Takes Helm
In a pivotal leadership transition, PayPal announced that Enrique Lores, currently the president and CEO of consumer electronics giant HP, will assume the roles of president and CEO on March 1. Until then, Chief Financial Officer Jamie Miller will serve as interim CEO. Lores brings over six years of experience leading HP, a tenure during which he navigated the company through its own set of market dynamics.
The change at the top underscores the pressure PayPal faces to innovate and maintain its market position. Outgoing CEO Alex Chriss had been focused on steering the company through a period of increased competition and evolving consumer spending habits. The board’s decision to replace Chriss suggests a desire for a new strategic direction and a faster pace of execution to address these challenges.
Challenges in Retail Spending and Payments Competition
The payments industry is currently navigating a period of softened retail spending. Consumers, grappling with elevated interest rates, persistently high living costs, and early signs of a softening labor market, are scaling back on discretionary purchases. This shift towards prioritizing everyday necessities over luxury items has been widely noted by major retailers and consumer goods companies, directly impacting transaction volumes for payments processors like PayPal.
Beyond macroeconomic pressures, PayPal continues to face intense competition. The entry of major technology companies such as Apple and Google into the core payments space has long been a concern for investors, threatening to erode PayPal’s market share despite its status as a legacy leader in digital payments. Newer fintech rivals also continue to innovate, adding to the competitive landscape.
Strategic Focus on Branded Checkout
A key strategic focus for PayPal under Alex Chriss had been growing its higher-margin branded checkout business. This initiative aimed at achieving ‘profitable growth’ while simultaneously streamlining costs associated with unbranded processing. The company’s branded checkout allows users to pay directly through PayPal on merchant websites, often seen as a more secure and convenient option.
However, growth in online branded checkout decelerated significantly in the fourth quarter, increasing by only 1% compared to 6% a year earlier. PayPal attributed this slowdown to weakness in U.S. retail, international economic headwinds, and tougher year-over-year comparisons. The company stated it is taking ‘near-term action to restore online branded checkout momentum,’ indicating that this area remains critical for its future profitability and market standing.
The confluence of a challenging retail environment, stiff competition, and a disappointing earnings forecast highlights the strategic urgency for PayPal’s new leadership. The significant investor reaction suggests that the market is keenly awaiting a clear and effective plan to revitalize growth and defend market share in an increasingly crowded and cost-sensitive digital payments landscape.