Leadership Transition Adds to PayPal’s Mounting Challenges

PayPal finds itself navigating turbulent waters. The company's efforts to rebuild investor confidence following years of restructuring have been complicated by a disappointing holiday quarter and the sudden announcement of a CEO change, creating fresh uncertainty about the payment giant's strategic direction.

The company's fourth-quarter results for 2025 fell short of market projections. Revenue came in at $8.68 billion, missing the expected $8.80 billion. Adjusted earnings per share were $1.23, below the $1.28 consensus estimate. This underperformance is particularly notable given that the final quarter typically provides seasonal tailwinds for payment processors, fueled by gift purchases, travel, and promotional events.

Adding to the pressure was a significant slowdown in a core strategic area: the higher-margin "Branded Checkout" business. Growth in online branded checkout decelerated sharply to just 1%, a stark drop from the 6% rate seen in the same quarter a year earlier. According to Chief Financial Officer Jamie Miller, several factors contributed, including pressure in U.S. retail, headwinds abroad, and more challenging year-over-year comparisons. Payment volume growth in this segment also cooled, showing a currency-adjusted increase of 1%, down from 5% growth in the third quarter.

New Leadership on the Horizon

Simultaneously with the earnings release, PayPal announced that CEO Alex Chriss will be departing. While the board of directors acknowledged progress had been made over the past two and a half years, it stated that the pace and execution of the turnaround had not met expectations.

Enrique Lores, most recently the CEO of HP for over six years, is slated to become PayPal's new President and CEO effective March 1, 2026. CFO Jamie Miller will serve as interim CEO until that date. Lores is credited with spearheading HP's own transformation, focusing on expanding its services, subscription models, and AI-driven offerings. In a related governance move, David W. Dorman has been appointed independent chair of the board with immediate effect.

Cautious Guidance and Intense Competition

The company's outlook provided further cause for concern. For the full year 2026, PayPal forecasts its adjusted annual profit to range from a slight decline in the low single-digit percentages to a small increase. This guidance falls well below the market's expectation for approximately 8% growth.

Should investors sell immediately? Or is it worth buying PayPal?

Furthermore, PayPal is stepping back from its previously communicated 2027 perspective. Management now intends to provide concrete forecasts only one year in advance, a shift that reduces long-term predictability for investors.

Company executives also pointed to weakening spending among low- and middle-income consumers as a headwind. Miller cited pressure across the entire retail merchant portfolio, referencing macroeconomic influences and what he described as a "K-shaped economy."

The competitive landscape remains fierce, with tech giants Apple and Google increasing their pressure in the payments market. Analysts at Evercore ISI have questioned the company's strategic direction in this context, pondering whether Lores will initiate another multi-year turnaround or potentially explore strategic options for parts of the business.

Key Facts at a Glance:
- Q4 2025 Revenue: $8.68 billion (Expected: $8.80 billion)
- Q4 2025 Adjusted EPS: $1.23 (Expected: $1.28)
- Q4 2025 Branded Checkout Growth: 1% (Prior Year: 6%)
- CEO Transition: Enrique Lores begins March 1, 2026; CFO serves as interim until then

Following a period of significant selling pressure in recent weeks, the share price touched a new 52-week low of €33.80. All eyes are now on the next key date: March 1, 2026, when Lores officially takes the helm. The market will be watching closely to see if this leadership change can quickly establish a clearer, more credible path forward for the year ahead.