Struggling PayPal Hires New CEO. Is Company Break-Up Coming?

Struggling PayPal Holdings (PYPL) on Tuesday announced a leadership change, bringing in Enrique Lores as its new president and chief executive. He replaces Alex Chriss, a former Intuit (INTU) executive. PayPal stock plunged on the news. Lores will take over effective March 1. He has been HP's (HPQ) president and CEO for six years. Also, Lores has been a PayPal board member for five years. HP stock tumbled on Tuesday amid Lores' departure. ↑ X More Videos0 seconds of 15 secondsVolume 0%Press shift question mark to access a list of keyboard shortcutsKeyboard ShortcutsEnabledDisabledShortcuts Open/Close/ or ?Play/PauseSPACEIncrease Volume↑Decrease Volume↓Seek Forward→Seek Backward←Captions On/OffcFullscreen/Exit FullscreenfMute/UnmutemDecrease Caption Size-Increase Caption Size+ or =Seek %0-9 Next UpApple’s AI Ambitions: Are Investors Losing Patience?06:41Subtitle SettingsOffGlobal X LineFont ColorWhiteFont Opacity100%Font Size100%Font Familysans-serifCharacter EdgeNoneEdge ColorBlackBackground ColorBlackBackground Opacity75%Window ColorBlackWindow Opacity0%ResetWhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%200%175%150%125%100%75%50%ArialCourierGeorgiaImpactLucida ConsoleTahomaTimes New RomanTrebuchet MSVerdanaNoneRaisedDepressedUniformDrop ShadowWhiteBlackRedGreenBlueYellowMagentaCyanWhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%0%WhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%0%0.5x1x1.25x1.5x2x Live00:0300:1100:15 The AI Paradigm Shift Is Reshaping The Tech Industry. Here's How Investors Can Capture Growth.

See All Videos NOW PLAYING The AI Paradigm Shift Is Reshaping The Tech Industry. Here's How Investors Can Capture Growth. Jamie Miller, chief financial and operating officer, will serve as interim PayPal CEO. In other changes, PayPal said David Dorman has been appointed as independent chairman of its board of directors effective immediately. ↑ X More Videos0 seconds of 17 minutes, 15 secondsVolume 0%Press shift question mark to access a list of keyboard shortcutsKeyboard ShortcutsEnabledDisabledShortcuts Open/Close/ or ?Play/PauseSPACEIncrease Volume↑Decrease Volume↓Seek Forward→Seek Backward←Captions On/OffcFullscreen/Exit FullscreenfMute/UnmutemDecrease Caption Size-Increase Caption Size+ or =Seek %0-9 Next UpApple’s AI Ambitions: Are Investors Losing Patience?06:41Subtitle SettingsOffGlobal X LineFont ColorWhiteFont Opacity100%Font Size100%Font Familysans-serifCharacter EdgeNoneEdge ColorBlackBackground ColorBlackBackground Opacity75%Window ColorBlackWindow Opacity0%ResetWhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%200%175%150%125%100%75%50%ArialCourierGeorgiaImpactLucida ConsoleTahomaTimes New RomanTrebuchet MSVerdanaNoneRaisedDepressedUniformDrop ShadowWhiteBlackRedGreenBlueYellowMagentaCyanWhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%0%WhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%0%0.5x1x1.25x1.5x2xAuto1080p720p360p180p Live00:0000:0017:15 The AI Paradigm Shift Is Reshaping The Tech Industry. Here's How Investors Can Capture Growth.

See All Videos NOW PLAYING The AI Paradigm Shift Is Reshaping The Tech Industry. Here's How Investors Can Capture Growth. Meanwhile, before the open, PayPal reported fourth-quarter earnings per share of $1.23, up 3% from a year earlier, and revenue of $8.68 billion, up 4%. Both adjusted profit and revenue missed Wall Street targets. Analysts expected PayPal earnings of $1.29 a share on revenue of $8.79 billion. PayPal's branded business has struggled amid market share losses to Apple (AAPL) and others. Wall Street analysts say PayPal could explore strategic options, such as a spinoff of Venmo.

Strategic Alternatives Under Review? "The board's action was not a surprise, but the timing was probably a bit sooner than most were expecting," said Evercore ISI analyst Adam Frisch in a report. "Lores assumes the CEO position, and while certainly a reputable executive, the big question is whether he will bring in a formidable payments team to attempt yet another multiyear turnaround or look to start reviewing options for strategic assets." At William Blair, analyst Andrew Jeffrey said in a report: "The company is throwing good money after bad as it invests for illusory growth acceleration. We consider a preferred path, like separating Venmo and buy now, pay later. This might allow a new entity to pursue digital finance while the remainder would be a pure-play e-commerce payment service provider." On the stock market today, PayPal stock plunged more than 20% to close at 41.70, marking its lowest price since early 2017. HP stock tumbled over 4% to 19. Further, PayPal's 2026 guidance calls for adjusted EPS to "decline in the low-single digits or increase slightly" versus consensus estimates for 8% growth to $5.78. PayPal said it expects transaction margin dollars, a key metric, to "slightly decline." San Jose, Calif.-based PayPal has evolved from an online checkout option to a mobile shopping and person-to-person payments app. It has pushed further into e-commerce, such as buy now, pay later consumer loans. Digital Wallets: Stiff Competition Some analysts have focused on PayPal's branded checkout total payment volume growth amid competition with Apple and others.

At Truist Securities, analyst Matthew Coad said in a report: "We believe the majority of the issue for PayPal is that their branded checkout offering is priced too high vs peers and has a worse user interface as well. Against that, the outsized reinvestment in the business could stoke fears of intensifying competition, and payments has been a pretty easy subsector for investors to hate lately." Will Nance, a Goldman Sachs analyst, maintains a sell rating on PayPal stock. "PayPal has been a share donor to newer payment methods like Apple Pay over time, and we believe it retains share from older consumers who became habituated to PayPal from the earlier days of e-commerce," he said in a recent report. Nance also added that PayPal faces stiff competition. "The incremental growth in e-commerce volumes has occurred on platforms where competing wallets (Shopify (SHOP), Stripe, Amazon, Apple, Google) have been gaining share from both merchant steering and increasing consumer habituation to digital wallets," he said. "We expect competitive pressures to be exacerbated by the agentic commerce channel, as OpenAI partners like Stripe are leading the development work in the industry, and also power payments behind large platforms like Shopify." PayPal brought in Chriss to spark a turnaround after then CEO Dan Schulman left the company in 2023. Verizon Communications (VZ) recently appointed Schulman as its CEO. PayPal Stock Technical Ratings Branded TPV is tied to the online PayPal checkout button that many consumers use when shopping online. The company's new definition of branded volume now includes "Pay with Venmo." Venmo, a person-to-person money transfer service, has expanded into debit cards and other areas. Also, repricing initiatives at subsidiary Braintree have pressured revenue growth as well as payment volumes but improved transaction margins. PayPal stock holds an Accumulation/Distribution Rating of E. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral. Further, PayPal stock holds a Composite Rating of 24 out of a best-possible 99, according to IBD Stock Check-up. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

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