PayPal shares sink on CEO exit, disappointing 2026 profit forecast

By Manya Saini

Feb 3 (Reuters) – PayPal replaced its CEO Alex Chriss, who was brought in to steer the payments firm through slowing growth and heightened competition, and simultaneously issued a lackluster profit forecast for 2026 on Tuesday, sending its shares down 19%.

The company’s board, which named HP’s Enrique Lores as its new president and CEO, said the pace of change and execution under Chriss was not in line with its expectations.

Chriss was tasked with turning around PayPal during a challenging period as post-pandemic trading volumes declined and competitive pressures in its core business from large technology companies and newer fintech rivals intensified.

PayPal said Chief Financial Officer Jamie Miller would serve as interim CEO until Lores assumes the role on March 1. Lores was the president and CEO at consumer electronics giant HP for more than six years.

Wall Street analysts said the unexpected CEO announcement raises questions about the company’s turnaround strategy.

“The big question is whether he will bring in a formidable payments team to attempt yet another multi-year turnaround or look to start reviewing options for strategic assets,” analysts at Evercore ISI said.

DIM OUTLOOK

PayPal expects full-year adjusted profit to range between a low-single-digit percentage decline and a slight increase, compared with Wall Street expectations of about 8% growth, according to data compiled by LSEG.

Miller said the company was no longer committing to the specific 2027 outlook laid out at its investor day last year and would now provide forecast one year at a time.

The change comes against the backdrop of weakening retail spending as shoppers, squeezed by elevated interest rates, stubbornly high living costs and signs of a softening labor market, cut back on discretionary purchases and prioritize everyday necessities. This trend has been flagged by major retailers and consumer goods companies as households navigate tighter budgets.

“We saw pressure across our retail merchant portfolio, particularly among lower and middle-income consumers,” Miller said in a post-earnings conference call with analysts.

“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.”

PayPal reported revenue of $8.68 billion for the holiday quarter, missing analysts’ average estimate of $8.80 billion, according to data compiled by LSEG.

Adjusted profit was $1.23 per share during the three months ended December 31, also below expectations of $1.28.

BRANDED CHECKOUT FOCUS

Growing PayPal’s higher-margin branded checkout business had been a key focus for outgoing CEO Chriss, who pushed for “profitable growth” while aiming to streamline costs tied to unbranded processing.

Online branded checkout growth decelerated to 1% in the fourth quarter, compared with 6% a year earlier, driven by weakness in U.S. retail, international headwinds and tougher comparisons.

Investors have long worried that the entry of Big Tech companies such as Apple and Google into PayPal’s core payments business could erode its market share despite its status as the legacy market leader.

The company said it was taking near-term action to restore online branded checkout momentum. Executives said while there were “constructive indicators”, it was hard to call out a precise timeframe when PayPal would see an overall inflection point for branded.

(Reporting by Manya Saini in Bengaluru; Editing by Shilpi Majumdar)