PayPal shares are down about 12% this year.
Eric Piermont/AFP via Getty Images
A big change at the top is coming for PayPal just when the payments company finds itself in need of a fresh start.
Alex Chriss is set to become the chief executive of
PayPal
(ticker: PYPL) on Sept. 27 following the planned departure of CEO Dan Schulman, who plans to remain on PayPal’s board until May 2024.
The ascension of Chriss to the top job comes on the heels of a rough spell for PayPal. After climbing during the pandemic, PayPal shares tumbled more than 75% over the past two years as the company has faced a general lack of investor interest in fintechs, increasing competitive pressure from
Apple
(AAPL), and weakening margins as growth in PayPal’s so-called branded checkout business has slowed.
With Chriss, a longtime
Intuit
(INTU) executive, taking the top spot, PayPal—and its investors are hoping for a reset. But as with all turnarounds, Wall Street is expecting it will take time.
Last week, MoffettNathanson analyst Lisa Ellis said that Apple’s growth in payments is “most directly negative” for PayPal versus other fintechs like
Block
(SQ) because the two compete on their respective checkout buttons.
MoffettNathanson’s Ellis downgraded PayPal shares to Market Perform from Outperform Monday and lowered her price target on shares to $75, down from $85. PayPal stock was off 1.8% to $63.06 Monday.
“We expect PayPal’s gross profit growth to remain lackluster, in the low- to mid-single digits, and we see the potential for further downside to our estimates,” Ellis wrote. Between 2018 and 2021, PayPal’s gross profit growth was in the double digits. It has since flattened and the stock has underperformed the broader market.
PayPal couldn’t immediately be reached for comment.
In addition to profit pressure, Ellis also noted that Chriss will be tasked with filling PayPal’s talent bench. There are currently vacancies or interim appointments in the following roles: chief operating officer, chief financial officer, treasurer, and chief strategy officer. Attracting talent amid PayPal’s challenges may be a heavy lift, Ellis wrote.
While PayPal is getting a much-needed fresh start, change could take time.
Write to Carleton English at [email protected]
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