PayPal Shares Drop 12% as CEO Change Follows Earnings Miss

This article first appeared on GuruFocus.

PayPal Holdings Inc. (NASDAQ:PYPL) said it plans to replace Chief Executive Officer Alex Chriss with HP Inc. CEO Enrique Lores after quarterly results came in below expectations, a setback that prompted a sharp selloff in early trading. The shares fell more than 12% to $45.95 shortly after the open in New York. The company said Chief Financial Officer Jamie Miller will step in as interim CEO, with Lores scheduled to take over on March 1. Newly appointed board chair David Dorman said that although progress had been made in recent years, the speed of execution may not have aligned with what the board was looking for.

The earnings miss reflected broader pressures across PayPal’s core business. Fourth-quarter earnings per share of $1.23 and revenue of $8.68 billion both missed expectations, with management pointing to softer US retail spending and international headwinds. Growth in PayPal-branded online checkouts slowed to 1% from 6% a year earlier, underscoring challenges in driving engagement. Full-year earnings per share of $5.31 also came in below the $5.35 to $5.39 range outlined in October, despite the company having raised its outlook twice during the year. Miller had previously cautioned that macroeconomic conditions could weigh on the firm’s ability to meet longer-term targets as efforts continue to better monetize its payments services.

Looking ahead, PayPal signaled that profitability metrics could face additional pressure. The company said full-year 2026 transaction margin dollars are expected to show a slight decline from last year. During the quarter, PayPal also applied to become a US bank with the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions, a move it said could support its small-business lending capabilities. The company already holds a banking license in Europe, and investors may be watching whether these initiatives, alongside the leadership transition, could help stabilize performance amid a more challenging macro backdrop.