By Paige Smith, Bloomberg
PayPal Holdings Inc. said HP Inc. Chief Executive Officer Enrique Lores will take the top job from Alex Chriss, whose turnaround plan failed to meet targets and streamline the sprawling payments business.
The shares tumbled as much as 19%, the biggest intraday drop in more than four years, after the CEO announcement and a separate statement showing fourth-quarter profit and revenue missed analysts’ estimates.
Chriss, who was tapped in 2023 to replace longtime CEO Dan Schulman, vowed at the time to prioritize profit while refocusing the firm on PayPal’s branded checkout experience. But the stock has lagged behind competitors as Chriss twice raised earnings guidance then failed to meet the new targets. Executives said Tuesday they could no longer commit to previous forecasts for next year.
“While some progress has been made in a number of areas over the last two years, the pace of change and execution was not in line with the Board’s expectations,” newly-appointed independent board chair David Dorman said.
Jamie Miller, the payments firm’s chief financial and operating officer, will serve as interim CEO until Lores takes over on March 1. Miller said on a conference call Tuesday that PayPal had “not moved fast enough or with the level of focus required.”
The San Jose, California-based company said Tuesday that growth in PayPal-branded online checkouts slowed to 1% in the fourth quarter, down from 6% a year earlier. The firm also highlighted weakness in US retail spending and headwinds internationally.
Fourth-quarter earnings per share of $1.23 and total revenue of $8.68 billion missed analysts’ estimates for the three-month period.
The timing of PayPal’s management changes “was probably a bit sooner than most were expecting,” Evercore ISI analyst Adam Frisch wrote in a note to clients. “The big question is whether he will bring in a formidable payments team to attempt yet another multiyear turnaround or look to start reviewing options for strategic assets,” Frisch said, referring to Lores.
Lores spent decades at HP working his way up from an engineering intern position to roles including running the office that managed the split from Hewlett Packard Enterprise in 2015 and helming HP’s printing business.
He took the helm there in 2019 with the goal of “reinventing” the company. On top of navigating HP through challenging PC and printer markets, Lores survived a hostile takeover bid by Xerox Holdings Corp. that ultimately failed during the pandemic.
Lores most recently had been steering HP through broader industry headwinds, from the uncertainty around US tariffs to weakening consumer and business demand for computers. Under Lores, HP had been shifting its global supply chain, boosting production in Vietnam, Thailand, India, Mexico and the US and away from China. A recovery in the long-ailing personal computer market had begun materializing last year, but tariffs threatened to derail progress.
Bruce Broussard, an HP board member, was appointed interim CEO while a search committee looks for his replacement, according to an HP statement.
Missed Guidance
Lores is now taking the helm of a firm that has struggled with earnings in recent quarters, with analysts skeptical of a turnaround. PayPal reported lower-than-expected full-year earnings per share of $5.31. It said in October the figure would be $5.35 to $5.39. The firm raised its full-year earnings outlook twice – once in July and again in October – before ultimately falling short.
Full-year 2026 transaction margin dollars, which represents how much the company earns from processing transactions after expenses, is also expected to show a “slight decline” from last year, according to a presentation.
During the fourth quarter, PayPal applied to become a US bank with the Federal Deposit Insurance Corp. and the Utah Department of Financial Institutions, which the firm said would aid its small-business lending capabilities. PayPal already has a banking license in Europe.
–With assistance from Lynn Doan and Georgie McKay.
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