PayPal shares tumble after forecasting 2026 profit below estimates, names Enrique Lores as CEO
PayPal PYPL-Q issued a lacklustre profit forecast for 2026 and reported fourth-quarter earnings below Wall Street expectations on Tuesday, pressured by weaker U.S. retail spending and slower growth in its branded checkout segment.
The company’s shares fell 9 per cent in premarket trading after the results. It also named HP’s Enrique Lores as president and CEO, effective March 1.
Retail spending has softened as cautious consumers, squeezed by still-high interest rates, stubbornly high living costs and signs of a softening labour market, cut back on discretionary purchases and prioritize everyday necessities, a pattern highlighted by major retailers and consumer goods companies as households navigate tighter budgets.
PayPal expects full-year adjusted profit to decline in the low-single digit percentage to increase slightly, compared with Wall Street expectations of about 8-per-cent growth, according to data compiled by LSEG.
It reported revenue of US$8.68-billion for the holiday quarter, missing the estimate of US$8.80-billion. Total payment volume rose 6 per cent on an FX-neutral basis to US$475.1-billion.
Adjusted profit was US$1.23 per share during the three months ended Dec. 31, also below analysts’ view of US$1.28.
The fourth-quarter results stand in contrast to a typical holiday quarter for payments firms as consumers usually spend more freely on gifts, travel and seasonal promotions.
Growing PayPal’s higher-margin branded checkout business has been a key focus for outgoing CEO Alex Chriss, who is pushing for “profitable growth” while aiming to streamline costs tied to unbranded processing.
Online branded checkout growth decelerated to 1 per cent in the fourth quarter, compared with 6 per cent a year earlier. The company said this was driven by weakness in U.S. retail, international headwinds and tougher comparisons.
Investors have long worried that the entry of Big Tech companies such as Apple and Google into PayPal’s core payments business could erode the company’s market share despite its status as the legacy market leader.
Though PayPal says it continues to perform well in its core products despite rising competition, the concerns have pressured its stock in recent years, with investors closely monitoring the branded checkout results.
The company said it was taking near-term action to restore online branded checkout momentum.
