BREAKINGVIEWS-PayPal’s new CEO pick embraces its dinosaur status

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Stephen Gandel

NEW YORK, Feb 3 (Reuters Breakingviews) - A digital payments trailblazer is ready to act its age. PayPal PYPL.O, which launched in 1998, has fallen behind younger rivals, predicting no earnings growth in 2026 and ejecting boss Alex Chriss. Replacement Enrique Lores hails from old-guard printer-and-PCs vendor HP HPE.N. Recent efforts match the move back toward the conventional, as the company applies for a banking license to expand in small-business lending. While it’s a minor admission of defeat, embracing finance over technological novelty is a smart path forward.

PayPal's results for the last quarter of 2025, unveiled on Tuesday, showed the need for change. Revenue increased less than Wall Street expected, while earnings dropped a steeper-than-predicted 8%. This is despite continued strength in overall retail spending, as well as strong results from the likes of Mastercard MA.N and Visa V.N.

Chriss replaced longterm CEO Dan Schulman in 2023 with a mandate to reignite growth. Instead, PayPal's branded ecommerce checkout failed to stem market-share losses to Apple Pay and others. Separate efforts, such as rolling out a stablecoin, fared little better.

PayPal's board said the company plans to sustain its Checkout push, among other initiatives. But their actions belie a more conservative shift.

Start with the appointment of Lores. During his six-year stint as HP's CEO, the bottom line shrank by 20%. As the PC market matured, he tried to pivot into subscriptions for ink and computers. Most importantly, though, he seemed to understand the limits of HP's position. Rather than spend on moonshots, Lores defended the company's free cash flow and bought back stock. As a result, HP's earnings per share rose 30%.

PayPal has similarly held steady on research and capital spending. It also recently applied for an industrial bank license. If successful, it would remake the company into something that looks less like a digital startup and more like a typical lender.

The shift is a sign of maturity. PayPal's stock price has slumped to a single-digit multiple of expected earnings, well below rival Block’s nearly 20 times. More upheaval, not less, is likely coming to the financial system.

As a quasi-bank, PayPal should command a better valuation, especially since its expected 27% return on equity, according to Visible Alpha, is above-par compared to traditional competitors. It would be a much better habitat for a company fast-becoming a digital dinosaur.

Follow Stephen Gandel on LinkedIn and X.

CONTEXT NEWS

PayPal on February 3 named HP’s Enrique Lores as its president and CEO. Lores replaces Alex Chriss, who took over the helm of PayPal from long-time leader Dan Shulman in 2023. The announcement came as PayPal reported disappointing earnings for the last three months of 2025, as well as a lackluster outlook for 2026.

(Editing by Jonathan Guilford; Production by Maya Nandhini)

((For previous columns by the author, Reuters customers can click on GANDEL/ stephen.gandel@thomsonreuters.com))