PayPal experienced a challenging quarter, reporting fourth-quarter earnings that fell short of Wall Street expectations and issuing a lackluster profit forecast for 2026. The company’s shares dropped over 17% in premarket trading following the announcement of underwhelming financial results, which highlighted the struggles of the payments giant amid a decline in post-pandemic trading volumes and intensified competition from larger tech firms and emerging fintech rivals.
In a strategic move, PayPal named Enrique Lores, the former president and CEO of HP, as its new president and CEO, succeeding Alex Chriss, who has been leading the company through this tumultuous period. Lores will officially take the helm on March 1, with current Chief Financial Officer Jamie Miller stepping in as interim CEO until Lores’ arrival.
The fourth-quarter report revealed that retail spending has softened, with consumers cutting back on discretionary purchases due to high interest rates and persistent living costs. PayPal’s revenue for the holiday quarter reached $8.68 billion, falling short of the forecasted $8.80 billion. The company indicated that total payment volumes rose by 6% on a foreign exchange-neutral basis, amounting to $475.1 billion. However, its adjusted profit of $1.23 per share also missed analysts’ expectations of $1.28.
These results showcase a contrast to the typical trends seen in the holiday season, where consumer spending is often higher due to gift-giving, travel, and seasonal promotions. As families navigate tighter budgets, major retailers and consumer goods companies have noted a shift in spending behavior, prioritizing necessary items over discretionary goods.
Despite the current hurdles, the appointment of Lores could signal a new direction for PayPal, as he brings extensive experience from the consumer electronics sector. The company is hopeful that under Lores’ leadership, it can effectively adjust to the evolving market landscape and regain a competitive edge.