PayPal Shares Plunge on Leadership Shake-Up and Dismal Outlook

Investors delivered a harsh verdict on PayPal Holdings Inc. last week, sending its stock tumbling approximately 19% in a single session. The dramatic sell-off was triggered by a dual announcement: an unexpected CEO change and a 2026 profit forecast that fell drastically short of market expectations.

The payments giant reported fourth-quarter 2025 results that failed to meet analyst projections across key metrics. According to data from LSEG, revenue came in at $8.68 billion, below the consensus estimate of $8.80 billion. Adjusted earnings per share were $1.23, missing the expected $1.28.

A particularly concerning signal was the dramatic slowdown in the company's branded checkout business. Growth in this segment cooled to just 1%, a significant drop from the 6% growth recorded in the prior-year period. Chief Financial Officer Jamie Miller, cited by Reuters, attributed part of the weakness to pressure within the portfolio of retail merchants, especially those serving low- and middle-income customers.

A Surprise Change in the Executive Suite

In a move that caught markets off guard, PayPal's board of directors announced a leadership transition. Alex Chriss will step down as CEO after roughly two and a half years. The board stated that while progress had been made under his tenure, the pace and execution of the company's strategy did not meet expectations.

Succeeding him will be Enrique Lores, who is slated to assume the roles of President and CEO effective March 1, 2026. Lores has served on PayPal's board for nearly five years and became its Chairman in July 2024. His previous experience includes more than six years as President and CEO of HP Inc.

To bridge the gap, CFO Jamie Miller will serve as interim CEO until Lores takes the helm. The board also appointed David W. Dorman as Independent Board Chair immediately. The company's statement indicated that Lores is expected to further strengthen PayPal's culture of innovation to drive long-term transformation.

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A Concerning Forecast for 2026

The guidance for the coming year compounded investor anxieties. For 2026, PayPal anticipates its adjusted profit will range from a slight decline (in the low single-digit percentage range) to a modest increase. This outlook stands in stark contrast to the market's embedded expectation of roughly 8% growth, based on LSEG data.

In another shift, Miller clarified that PayPal is no longer committing to the specific 2027 outlook presented at last year's Investor Day. Going forward, the company will issue financial projections only one year at a time.

Strategic Pressure on Core Business

The branded checkout operation, which is more profitable and has been a central strategic focus, now represents a critical challenge. PayPal identified three factors behind the slowdown: weakness in U.S. retail, international headwinds, and more demanding year-over-year comparisons.

While management mentioned short-term initiatives to rebuild momentum, no specific timeline was provided for when improvements might materialize in the financial results.

The path forward is now clearly defined. Operational responsibility rests with Interim CEO Jamie Miller until March 1. The incoming leader will inherit a company under intense pressure to demonstrate rapid progress in revitalizing its branded checkout growth and improving the profit trajectory for 2026.