PayPal forecasts weak 2026 profit outlook, misses Q4 revenue, stock plunges nearly 16%
American payments giant PayPal announced a disappointing profit outlook for 2026 on Tuesday, reporting fourth-quarter results that fell short of Wall Street forecasts.
The company also announced the appointment of HP’s Enrique Lores as its new president and CEO.
PayPal Shares fell nearly 16% in premarket trading after the company’s board said the pace of transformation and strategic delivery under current CEO Alex Chriss had failed to achieve its goals.
Chriss was responsible for guiding PayPal through a turbulent phase when post-pandemic trading activity slowed and competitive threats from major tech firms in the mainstream industry and emerging fintech rivals became even more intense.
PayPal announced that Chief Financial Officer Jamie Miller will serve as interim CEO until Lores takes over on March 1.
Lores served as president and CEO of hardware giant HP for more than six years.
Weak Consumer Spending
Consumer spending weakened as buyers, burdened by high interest rates, persistent living costs and signs of a cooling job market, reduced non-essential spending and opted for daily essentials; As families manage tighter budgets, leading retailers and consumer brands have noticed this trend.
PayPal forecast 2026 adjusted earnings to range from a low-single-digit decline to a marginal gain, falling short of Wall Street’s growth forecasts of about 8% Reuters Referring to LSEG analytics.
4th Quarter Earnings
The firm reported $8.68 billion in revenue for the holiday quarter (October-December), missing estimates of $8.80 billion.
Total payment volumes increased by 6% on a forex neutral basis to $475.1 billion.
Adjusted earnings reached $1.23 per share in the quarter ended Dec. 31, again missing the $1.28 analyst consensus.
These results differ from payment processors’ standard holiday performance as shoppers typically increase their spending on gifts, travel and winter deals.
Expanding PayPal’s high-margin branded payments unit was a key goal of former CEO Chriss, who advocated “profitable growth” while trying to reduce overhead from unbranded transactions.
Digital branded payment expansion slowed to 1% in the fourth quarter from 6% a year earlier.
Management attributed this to the sluggish retail environment in the U.S., global economic pressures and the difficulty of year-over-year comparisons.
Stakeholders remain concerned about entry of Big Tech organizations Apple and Google’s entry into PayPal’s core transaction space could reduce its presence in the market despite its historical dominance.
While PayPal continues to operate effectively in its core segments despite increased competition, these concerns have weighed on its stock valuation recently as investors scrutinize its branded payments performance.
The firm said it was taking urgent measures to revive online branded payment growth.
