Why PayPal Stock Crashed Today
Key Points
Investors are losing patience with PayPal's lack of progress on its growth initiatives.
A leadership shuffle is adding to the uncertainty.
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Shares of PayPal (NASDAQ: PYPL) plunged on Tuesday after the payment processor warned that its profits could fall in 2026.
By the close of trading, PayPal's stock price was down more than 20%.
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Image source: PayPal.
Lackluster growth
PayPal's revenue rose 4% year over year $8.7 billion in the fourth quarter. Active accounts inched up 1% to 439 million, while payment transactions grew 2% to 6.8 billion.
Interim CEO Jamie Miller said PayPal failed to achieve its growth targets for its lucrative branded checkout business. Total payment volume for this key segment increased just 1% on a currency-neutral basis, down from 5% in the third quarter.
All told, PayPal's adjusted operating income and earnings per share grew 3% to $1.6 billion and $1.23. That was below Wall Street's expectations, which had called for adjusted per-share profits of $1.29.
Fierce competition is taking a toll
Looking ahead to 2026, PayPal said its full-year adjusted profits could range from a slight increase to a low-single-digit percentage decline. Miller said lower- and middle-income consumers were pulling back on their retail spending.
PayPal is also facing intensifying competition from the likes of Apple and Alphabet's Google. With their technical expertise, abundant capital, and massive user bases, the tech titans are formidable threats.
To meet these challenges, PayPal's board of directors decided to replace outgoing CEO Alex Chriss with incoming chief executive Enrique Lores, who will assume the role on March 1.
Lores is a respected leader who has served as HP's CEO since November 2019. He's credited with leading the personal computer maker through the pandemic and helping to position it for an artificial intelligence (AI)-based future.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and PayPal. The Motley Fool recommends Helmerich & Payne and recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.
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