PayPal replaced its chief executive, saying its board decided “the pace of change and execution was not in line” with expectations and sending shares tumbling.
The payments company said Tuesday that Alex Chriss would step down as CEO, and selected former HP CEO Enrique Lores to be its next leader, effective March 1.
PayPal separately said it is expecting earnings to decline in 2026 after growth from its key branded checkout product, which lets customers use PayPal when making online purchases, sputtered in the fourth quarter.
Shares were recently trading 19% lower, at $42.55, on pace for its lowest close in nearly nine years. The stock has lost more than half of its value over the past year.
Jamie Miller—PayPal’s current chief financial and operating officer, who will serve as interim CEO during the transition—said on a call with analysts that weaker-than-expected performance across branded checkout stemmed from macroeconomic challenges and poor internal execution.
U.S. retail trends continue to be weak, especially among lower- and middle-income consumers. “While part of this can be attributed to macrofactors and a K-shaped economy, it is also clear that we need to do more to win with key merchants,” she said.
PayPal’s customer base skews toward middle- to lower-income levels, Susquehanna analyst James Friedman said in a note. That makes the San Jose, Calif., company more exposed to shifts in consumer sentiment, including the pullback in discretionary spending in 2025.
Branded checkout was additionally hurt by international headwinds and a slowdown across previously high-growth verticals such as travel, Miller said. Internally, operational and deployment issues further pressured performance.
“The reality is our merchants, especially the largest ones, have many competing priorities and require much more hands-on integration support than we anticipated,” she said. “So while challenges in the macroenvironment are real, we haven’t executed as well as we need to.”
Payment-volume growth in branded checkout slowed to 1% during the recent quarter, compared with 6% the year before.
Branded checkout is among PayPal’s highest-margin businesses and is considered by Wall Street to be an important indicator of the company’s strength. In recent years, management has been trying to add revenue streams so it isn’t as reliant on branded checkout.
As part of those efforts to diversify, PayPal is pushing its debit card and trying to make the payment-transfer app Venmo more profitable. In the fourth quarter, Venmo’s total payment volume growth increased 3 percentage points year-over-year to 13%.
PayPal also is ramping up investments across its business, including branded checkout, online shopping via artificial-intelligence agents, and buy now, pay later. Increasing investments could weigh on margins in the year ahead, Friedman, the analyst, said.
Separately, PayPal guided for earnings per share to decrease by a mid-single-digit percentage in the current quarter and the full fiscal year. Analysts were anticipating a 3% increase in the quarter and an 8% increase for the full year, according to FactSet.
In the fourth quarter ended Dec. 31, PayPal’s profit was $1.44 billion, or $1.53 a share, compared with $1.12 billion, or $1.11 a share, a year earlier.
Stripping out certain one-time items, adjusted per-share earnings were $1.23, below the $1.29 anticipated by analysts, according to FactSet.
Revenue rose 4% to $8.68 billion. Analysts surveyed by FactSet forecast revenue of $8.79 billion.
Write to Katherine Hamilton at katherine.hamilton@wsj.com and Connor Hart at Connor.Hart@wsj.com
Corrections & Amplifications
PayPal has tapped Enrique Lores to be its next leader. An earlier version of this article misspelled the executive’s first name as Enriques. (Corrected on Feb. 3)
