PayPal Shares Face Mounting Headwinds

PayPal's stock continues to struggle, failing to recover from a steep decline earlier this month. A combination of weaker quarterly results, a subdued outlook for 2026, and an impending leadership change is fueling investor uncertainty. This sentiment is further compounded by the announcement of a legal review, keeping market concerns active.

The downward pressure originated with the release of fourth-quarter 2025 figures and, more significantly, the company's forward guidance. Quarterly revenue reached $8.68 billion, falling short of the $8.80 billion analysts had anticipated. Adjusted earnings per share also missed the mark, coming in at $1.23 versus an expected $1.28.

The more substantial blow was delivered by the 2026 outlook. Management's guidance for adjusted annual profit per share ranges from a low single-digit percentage decline to a slight increase. This projection sits well below Wall Street's expectation for approximately 8% growth.

Core Business Slowdown and Analyst Reactions

A persistent area of focus is the performance of PayPal's "branded checkout" business. Growth in this segment decelerated to 1% in Q4, down from 6% in the prior-year period. During an earnings call, Interim CEO Jamie Miller acknowledged that execution, particularly in branded checkout, "was not where it needs to be."

The company also cited pressure within its merchant portfolio, especially among lower and middle-income consumer groups. In response, several analyst firms revised their assessments. Citigroup reduced its price target from $60 to $42 per share, maintaining a "Neutral" rating on the equity.

Leadership Transition and Legal Scrutiny

Concurrently, the board of directors announced that CEO Alex Chriss will be replaced by Enrique Lores. Lores, the former CEO of HP, has served on PayPal's board since 2019 and became its chairman in July 2024. According to CNBC, the board justified the move by stating that the pace and execution under Chriss had not met expectations. CFO Jamie Miller will lead the company on an interim basis until the handover on March 1.

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

Adding to the challenges, the law firm Levi & Korsinsky announced it is examining PayPal concerning its 2026 financial outlook. The investigation will assess whether investors were informed in a timely manner about headwinds that contributed to the weak forecast. The period under review is between the Q3 earnings call on October 28, 2025, and the recent announcement on February 3.

Operational Context and Next Steps

Operationally, the picture remains mixed. For the full year 2025, PayPal reported a total payment volume of $1.79 trillion, representing a 7% increase. The company also generated free cash flow of $6.4 billion and announced plans for share repurchases of approximately $6 billion in 2026.

Following its sharp drop of around 20% on February 3, the stock declined a further 2.4% yesterday to close at $40.46. The next key date for investors is March 1, when Enrique Lores officially assumes the CEO role. His appointment is expected to provide clearer direction for the company's strategy following the disappointing 2026 forecast.

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