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PayPal Holdings, Inc. (PYPL) experienced a dramatic market downturn on Tuesday, February 3, 2026, with shares plunging over 16% in premarket trading following the release of disappointing fourth-quarter results and weak 2026 guidance. The payments giant missed Wall Street expectations on both earnings and revenue while simultaneously announcing a leadership change at the top.

The company’s struggles reflect broader challenges in the digital payments space, including intensifying competition from Big Tech players and softening consumer spending patterns that have pressured growth in its core branded checkout business.
 

Earnings Miss and Slowing Checkout Growth Pressure Results

PayPal’s fourth-quarter results disappointed across multiple metrics, with non-GAAP earnings per share of $1.23 missing the consensus estimate of $1.29. Revenue came in at $8.68 billion, falling short of the $8.80 billion Wall Street expected, despite total payment volume rising 6% on a currency-neutral basis to $475.1 billion.

The weaker-than-expected performance stood in stark contrast to typical holiday quarters when consumers usually spend more freely on gifts and seasonal purchases.

The company’s critical branded checkout segment showed concerning deceleration, with online branded checkout growth slowing to just 1% in the fourth quarter compared to 6% growth a year earlier. Management attributed this weakness to softening U.S. retail spending, international headwinds, and tougher year-over-year comparisons.

Operating metrics revealed payment transactions grew only 2% in Q4, while transactions per active account declined 5% to 57.7, signaling reduced customer engagement. Total operating expenses of $7.17 billion exceeded the $6.91 billion analyst consensus, further pressuring profitability.

Interim CEO Jamie Miller acknowledged the execution shortfall, stating that while the company grew revenue, transaction margin dollars, and earnings per share in 2025, “our execution has not been where it needs to be, particularly in branded checkout.”

The disappointing results prompted analyst Danil Sereda to note that the softer frequency and engagement metrics were “not what bulls have been waiting for,” calling the premarket decline “well deserved.”
 

CEO Transition and Weak 2026 Outlook Rattle Investors

In a significant leadership shakeup, PayPal announced that HP Inc. veteran Enrique Lores would replace Alex Chriss as president and CEO effective March 1, 2026. The board made the decision after conducting a detailed review of PayPal’s competitive position within the broader industry landscape.

Chriss had led the company for approximately two and a half years, focusing on “profitable growth” and streamlining costs tied to unbranded processing, but ultimately failed to deliver the execution improvements investors demanded.

The company’s 2026 guidance further rattled investors, with PayPal expecting full-year non-GAAP earnings per share to decline in the low single digits or remain slightly positive compared to 2025’s $5.31.

This fell dramatically short of the average analyst estimate of $5.73, representing approximately 8% expected growth. For the first quarter of 2026, the company projected non-GAAP EPS to decline in the mid-single digits versus $1.33 in Q1 2025, well below the $1.38 consensus estimate.

PayPal faces mounting competitive pressures as Big Tech companies including Apple and Google have entered its core payments business, threatening to erode market share despite its legacy leadership position. The company indicated it was taking near-term actions to restore momentum in online branded checkout, though specific details were not provided.

With the stock trading at $43.62 in premarket (down $8.71 or 16.64% from the previous close of $52.33), investors showed little confidence in the company’s ability to quickly reverse its fortunes amid a challenging macroeconomic environment characterized by cautious consumer spending and stubborn inflation.

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