David Brooks
PayPal just executed one of the most drastic moves in its corporate history: firing CEO Alex Chriss after a mere 16 months on the job. I won't sugarcoat it: this is a major red flag for anyone with exposure to this company, whether you're an investor, an employee, or just someone who uses the service.
The announcement dropped on February 3rd, 2026, though the termination was effective as of the previous day. The stock responded exactly as you'd expect: down 20% to $41.70, with trading volume 792% above the daily average. If you ask me directly, this is the kind of drop that doesn't recover in weeks.
The Fall of Alex Chriss: 16 Months That Weren't Enough
When Alex Chriss arrived at PayPal in September 2023, he came with the aura of a savior. He'd been the mastermind behind Intuit GoPayment and was supposed to modernize a company that had been losing ground to nimbler competitors for years.
My verdict is clear: PayPal's board expected miracles on an impossible timeline, and Chriss didn't deliver. The official statement from the board leaves no room for interpretation: "the pace of change and execution did not meet expectations." Translated into real business speak: you didn't move the needle fast enough.
But here's the problem nobody wants to admit: PayPal's troubles didn't start with Chriss. The company has been in structural decline for years, and 16 months isn't enough time to reverse a decade of questionable strategic decisions.
The Q4 2025 numbers were the final straw:
- EPS of $1.23 vs. Wall Street's expected $1.29
- Branded checkout grew just 1%, down from 6% growth in Q4 2024
- 2026 guidance: flat or slightly negative, when analysts expected +8%
- PayPal completely withdrew its 2027 targets
That branded checkout collapse is particularly alarming. It's PayPal's core product, the reason users choose the PayPal button over manually entering their card details. Going from 6% growth to 1% in a single year signals that something is fundamentally broken.
Enrique Lores: The Spanish Executive Inheriting a Company on Fire
The new CEO will be Enrique Lores, a Spaniard born in Madrid with an MBA from ESADE and 36 years at HP. Yes, you read that right: 36 years. He joined as an intern and left as CEO, a trajectory that speaks volumes about his corporate survival skills.
Lores doesn't arrive as a complete unknown. He's been PayPal's Board Chairman since July 2024, meaning he's spent over a year observing the company from the inside. This cuts both ways.
The positives:
- He knows the company, its problems, and its culture
- He has experience transforming legacy companies (he took HP from pure hardware to a services and subscription model)
- His HP Instant Ink project surpassed 9 million subscribers, proving he understands recurring revenue models
The concerns:
- If he's been on the board for a year and couldn't prevent this crisis, what does that tell us about his ability to influence change?
- HP and PayPal are very different animals: consumer hardware vs. digital payments infrastructure
- At 60 years old, is he the right person to compete against fintechs run by founders in their early 30s?
I won't pretend neutrality here: the Lores appointment smells like a defensive play. The board needed someone they trusted who could take control immediately, and Lores fit that profile. Whether he was the best long-term strategic choice is an entirely different question.
The Context: A Crisis Years in the Making
To understand the magnitude of this problem, you need to look beyond the last 16 months. PayPal is weathering a perfect storm with much deeper roots.
The 2023 user hemorrhage:
In 2023, PayPal lost 8 million active users. Not 8,000. Not 80,000. Eight million. It was the largest user decline in the company's history, marking the beginning of a confidence crisis that still hasn't been resolved.
The failed migration:
One of Chriss's flagship projects was migrating merchants to a new, more modern checkout system. After 15 months of effort, only 25% of merchants had completed the migration. That pace is unacceptable in an industry where speed is everything.
The competition shows no mercy:
While PayPal was trying to modernize, Apple Pay, Google Pay, Stripe, and Shop Pay have been aggressively capturing market share. PayPal still leads with 47.4% of the online payments market, but that number has been declining for years.
This situation reminds me a lot of what we've seen in other tech sectors. As we analyzed in the software bear market that hit Microsoft, companies that don't adapt quickly enough to market changes end up paying a very steep price. PayPal is the textbook example of a company that rested on its laurels.
The stock impact:
To put the severity of this situation in perspective: PayPal shares have fallen 86% from their all-time high of $308.53 in July 2021. That means someone who invested $10,000 at the peak now has approximately $1,350. It's monumental value destruction.
Venmo: The Only Bright Spot in a Sea of Problems
If there's anything positive to salvage from this disaster, it's Venmo. The peer-to-peer payments app remains PayPal's most valuable asset, though many would argue the company hasn't figured out how to properly monetize it.
Venmo's numbers:
- 67 million active users
- 20% year-over-year revenue growth
- Growing adoption among Gen Z and millennials
My verdict is clear: Venmo should be Lores's absolute priority. It's the only PayPal product with real traction among younger generations, and that's where the future of digital payments lies.
The problem is that monetizing Venmo without alienating its users is incredibly difficult. The user base loves the app precisely because it's simple and free for person-to-person transfers. Any attempt to add fees or aggressive advertising could trigger a mass migration to alternatives like Zelle or Cash App.
What Analysts Are Saying (And Why You Should Be Skeptical)
Wall Street analysts are divided, which in itself is a sign of uncertainty.
HSBC was particularly blunt: "It won't be easy and will take time." It's the kind of phrase analysts use when they want to say "this is really ugly" without committing too much.
The current recommendation landscape:
- Only 34% of analysts recommend buying
- The median price target is $69, implying a theoretical 65% upside
- But that price target was calculated before the firing and the crash
If you ask me directly, I'd be skeptical of any price target published before February 3rd. Analysts will need to recalculate their models with the new reality: a fired CEO, withdrawn guidance, and a company in crisis mode.
The Questions Lores Will Have to Answer
As a former VP of Operations, I've seen enough CEO transitions to know which questions matter. These are the ones Enrique Lores will need to answer in the next 90 days:
1. What's the strategy to stop the market share bleeding?
PayPal can't keep losing ground to Apple Pay and Google Pay indefinitely. Lores needs to articulate a clear plan for differentiation.
2. What happens with the checkout migration?
With only 25% of merchants migrated, this initiative is at a critical juncture. Does it get accelerated, paused, or abandoned?
3. How do you monetize Venmo without destroying it?
It's the million-dollar question (literally). Venmo has the engagement but not the margins.
4. Will there be layoffs?
In my experience, when a new CEO arrives at a company in crisis, headcount reductions usually follow. PayPal has approximately 27,000 employees. I wouldn't be surprised to see a significant reduction in the coming quarters.
This pattern of post-crisis restructuring is something we're seeing more and more in the tech sector. The SaaS pricing inflation is forcing many companies to rethink their cost structures, and PayPal won't be the exception.
My Verdict: A Necessary But Insufficient Change
After analyzing all the data, my conclusion is mixed.
Was the CEO change necessary? Probably yes. Chriss's numbers were unacceptable, and the board couldn't keep waiting while the company bled out.
Is Lores the right person? It's a risky bet. He has experience transforming legacy companies, but PayPal faces challenges HP never had: competition from Big Tech with unlimited resources (Apple, Google), nimble fintechs (Stripe, Square), and an aging user base.
Should you invest in PayPal now? If you ask me directly, I'd wait. The 20% drop might look like an opportunity, but without a clear strategic plan from Lores, this could be a falling knife. I'd rather buy after seeing the first 100 days of the new CEO than try to guess the bottom.
For PayPal users: I don't expect dramatic service changes in the short term. Lores's priority will be stabilizing finances and regaining Wall Street's confidence, not revolutionizing the product.
For PayPal employees: Brace for turbulence. CEO changes at companies in crisis almost always come with restructuring. Update your LinkedIn.
The Future of Digital Payments: Is There Room for PayPal?
The most important question nobody's asking is whether PayPal has a place in the future of digital payments. It's not rhetorical: the world has changed dramatically since PayPal was the only real option for online payments.
Today, Apple Pay comes pre-installed on 1.5 billion devices. Google Pay has native Android integration. Stripe processes payments for almost every startup on the planet. Shop Pay is capturing Shopify's e-commerce market.
What does PayPal offer that these players can't? That's the question Enrique Lores will have to answer, and the answer will determine whether PayPal survives the next decade or becomes another case study of companies that couldn't adapt.
I won't sugarcoat it: the road ahead is extremely difficult. But if HP's history teaches us anything, it's that companies can reinvent themselves when they have the right leadership. The question is whether Lores can do for PayPal what he did for HP. The next 12 months will give us the answer.
Frequently Asked Questions
Why was Alex Chriss fired from PayPal?
PayPal's board cited that "the pace of change and execution did not meet expectations." In concrete terms, branded checkout grew just 1% (vs. 6% the previous year), earnings missed Wall Street estimates, and the company had to withdraw its 2027 targets.
Who is Enrique Lores, PayPal's new CEO?
Enrique Lores is a Spanish executive with 36 years of experience at HP, where he rose to CEO. He transformed HP from a pure hardware company to a services and subscription model. He's been PayPal's Board Chairman since July 2024, so he knows the company from the inside.
Why did PayPal stock fall so much?
Shares dropped 20% on the day of the announcement due to the combination of the CEO firing, disappointing quarterly results, and the withdrawal of 2027 targets. Additionally, trading volume was 792% above average, indicating massive selling.
Is it a good idea to invest in PayPal now that it's crashed?
It's a high-risk question. While the 20% drop might look like an opportunity, PayPal faces serious structural problems: market share loss, competition from Big Tech and fintechs, and a business model that needs reinvention. I'd recommend waiting to see the new CEO's first strategic moves.
What will happen to Venmo after this change?
Venmo remains PayPal's most valuable asset, with 67 million users and 20% revenue growth. Lores is likely to make it a strategic priority, though monetizing it without alienating users will be a significant challenge.
