PayPal Faces Pressure as Growth Outlook Banked on Weakness and Leadership Change

Key takeaways:
- Q4 2025: Revenue and earnings per share missed estimates
- 2026: Earnings outlook softened due to headwinds in the U.S. consumer environment and in international markets (Germany highlighted as a challenge)
- Management transition: Enrique Lores set to assume the CEO role starting March 1
- Analyst revisions: Price targets lowered across multiple firms, with a mix of Sell and Hold/Neutral ratings

Weak results, cautious forward view

The investor mood soured after PayPal’s fourth-quarter 2025 results, which fell short of expectations on both top line and earnings. The disappointment was compounded by the company’s guarded 2026 guidance. Management attributed the pressure to softer spending by U.S. retail shoppers and to headwinds abroad, explicitly citing Germany as a pressure point. The linkage is straightforward: when consumer spending cools, PayPal’s payment volumes tend to decelerate.

Branded checkout growth slows—the core concern

Should investors sell immediately? Or is it worth buying PayPal?

A central theme in the debate is the slower growth in PayPal’s branded checkout segment, the core payment flow under the PayPal brand. In Q4, this volume rose by only 1%, a far weaker pace than the prior quarter. With growth in the flagship business decelerating, questions arise about PayPal’s ability to defend market share and meet ambitious growth targets. Nonetheless, the company remains profitable and generated a substantial free cash flow in 2025.

Analysts trim targets

Following the results, several research teams adjusted their outlooks downward. Rothschild & Co Redburn kept a Sell rating and lowered its price target. Wells Fargo, RBC Capital Markets, and HSBC also reduced their targets, pointing to execution risks and slower expansion in the branded checkout segment. Overall, the market leaning has shifted toward Hold or Neutral ratings rather than Buy.

Leadership transition on the near horizon

March 1 marks the start of Enrique Lores’s tenure as the next PayPal chief executive, placing a key milestone squarely in the midst of investors watching for signals on execution and the growth trajectory of PayPal’s core business. The upcoming leadership change adds another layer of uncertainty as the company charts a path through a challenging environment for both domestic and international consumers.