One-time payments darling PayPal (PYPL) saw its stock tumble to an 8-year low after the company announced the shock departure of CEO Alex Chriss. Chriss, who served roughly two and a half years in the top job, was shown the door. This decision came amid growing concerns about execution, slowing growth, and intensifying competition in digital payments.
The announcement caught markets completely off guard and sent shockwaves through the $39.5 billion firm’s shareholder base. The shares dropped more than 20% following the announcement. This extended a steep decline that has pushed the stock to multi‑year lows.
Chriss will be replaced by former HP (HPQ) CEO and current PayPal chairman Enrique Lores, effective 1 March.
Limp Q4 sparks shake-up
The leadership change came ahead of PayPal’s Q4 earnings report, which fell short of expectations on both revenue and earnings. The company reported Q4 earnings of $1.23 per share, missing estimates of $1.29. In addition, revenue came in at $8.68 billion, below the $8.77 billion–$8.80 billion analysts had anticipated.
PayPal’s board said the ‘pace of change and execution’ under Chriss did not meet expectations. It is a particularly notable critique given the company’s multi-year struggles in its core branded checkout business. This business accounts for roughly half of PayPal’s profits. Growth in branded checkout plunged to 1% in the fourth quarter, which was far below prior-year levels.
Interim CEO Jamie Miller, currently CFO and COO, acknowledged operational missteps, including challenges in rolling out new merchant tools and difficulties in shifting consumer behaviour across the company’s 439 million active users.
The underperformance comes amid rising competition from Apple, Shopify, Google, and newer fintech entrants in checkout and digital payments.
Weak 2026 outlook alarms investors
Adding to investor unease, PayPal issued a soft profit forecast for fiscal 2026, projecting adjusted earnings to be flat or decline slightly, far below the rough 8% growth analysts expected. The company will also abandon its previously issued 2027 targets. Instead, it will opt for rolling one‑year guidance due to limited long‑term visibility.
Management cited a tougher consumer spending environment, particularly among lower‑ and middle‑income shoppers. There are also well documented competitive pressures in e‑commerce payments, not least from AI. The weakened guidance reinforced fears that PayPal is losing market share in both branded and unbranded payment channels.
Ditching the CEO was a real shock but the poor Q4 and guidance is less surprising given the stiffening competition in the payments space as AI throws disruption bombs. PayPal is simply no longer the dominant force it once was. Therefore, market share is being eroded at a worrying rate.
HSBC believes that triggering greater consumer and merchant engagement ‘will not be easy and, at minimum, will take time’, a commodity in short supply. Steep forecast downgrades have been flooding in, leaving the rolling 12-month PE at 7.3. That’s staggering when considering it was three-times that barely a year ago. In the past, it had consistently traded in a 30-50 range.
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