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PayPal is changing its leadership after a disappointing quarter that rattled investors and showed how
quickly the online payments boom has cooled.

The company will replace Chief Executive Officer Alex
Chriss and hand the reins to HP Inc. chief Enrique Lores, as slowing checkout
growth, softer US retail spending and a weaker earnings outlook weighed on the
stock and raised fresh questions over PayPal’s ability to reignite momentum.

PayPal announced that Jamie Miller, the company’s
chief financial officer, will serve as interim CEO until Lores takes over on
March 1.

Weak Results and Leadership Shake-Up Hit PayPal Stock

The decision follows a period in which management
struggled to convert rising payment volumes into stronger profit and to meet
the targets it had set for investors.

Newly appointed board chair David Dorman signaled
frustration with the pace of change at the company. “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,” the company mentioned.

Investors reacted sharply to the announcement and the
numbers. PayPal’s shares was down nearly 20% at press time, dropping
to $42.30 after the company reported quarterly profit and revenue that fell
short of analysts’ estimates.

The latest quarter exposed how macroeconomic pressures
and changing consumer behavior weigh on PayPal’s core business. The company
pointed to weakness in US retail spending as a drag on performance, alongside
international headwinds that hit transaction volumes and margins.

Continue reading: Crypto.com Enables PayPal Payments for Crypto Purchases in EU

Miller had already warned in October that
macroeconomic conditions could make the company’s longer-term targets harder to
reach. Since then, the environment has not improved enough to offset the
structural challenges of monetizing payments amid rising costs and intense
competition.

Profitability Under Pressure and Guidance Reset

The financials highlighted a squeeze on profitability.
Fourth-quarter earnings per share increased 3% to $1.23, with total revenue
rising 4% to $8.9 billion, both below analyst expectations for the three-month
period.

The company also reported full-year earnings per share of $5.31,
missing its own guidance range of $5.35 to $5.39 issued in October.

Despite the disappointing earnings, PayPal continued
to pursue strategic initiatives aimed at broadening its revenue base. During
the quarter, the company applied to become a US bank with the Federal Deposit
Insurance Corp. and the Utah Department of Financial Institutions. It already
holds a banking license in Europe.

This article was written by Jared Kirui at www.financemagnates.com.

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