PayPal Stock Falls; 2026 Profit Outlook Disappoints, Enrique Lores Named CEO
PayPal Inc. has recently shared its profit outlook for 2026, which has disappointed investors. The company reported fourth-quarter earnings that fell short of Wall Street’s expectations, leading to a 9% drop in its share price during premarket trading.
Profit Forecast and Earnings Report
For 2026, PayPal indicated an adjusted profit decline in the low single digits. This contrasts starkly with Wall Street’s expectation of around 8% growth. The company’s fourth-quarter revenue reached $8.68 billion, missing estimates of $8.80 billion.
- Fourth Quarter Performance: Adjusted profit was $1.23 per share, lower than the anticipated $1.28 per share.
- Total Payment Volume: Increased by 6% on an FX-neutral basis, amounting to $475.1 billion.
Factors Influencing Performance
Weaker U.S. retail spending has adversely affected PayPal’s performance. Consumers, facing high interest rates and rising living costs, are prioritizing essential purchases over discretionary spending. This trend is consistent with insights from major retailers and consumer goods companies.
Challenges in the Market
Enrique Lores, previously with HP, is set to take over as PayPal’s president and CEO on March 1. The company faces significant competition from tech giants like Apple and Google, which pose a threat to its market share. Despite being a leader in the payments sector, these challenges have led to investor concerns about growth and profitability.
Branded Checkout Segment Performance
PayPal has focused on growing its higher-margin branded checkout segment. However, recent data reveals that growth in this area slowed to just 1% in the fourth quarter, down from 6% the previous year. The company cited weaknesses in U.S. retail, international challenges, and tougher comparisons as factors contributing to this slowdown.
Strategic Actions Moving Forward
In response to these challenges, PayPal is implementing near-term strategies aimed at revitalizing its online branded checkout momentum. The emphasis is on fostering profitable growth while managing costs associated with unbranded processing. The company remains committed to enhancing its core products amid rising competition.
