PayPal Stock Crashes 17% After Q4 Earnings

In a surprising market twist today, PayPal Holdings, Inc. saw its stock tumble sharply after reporting its fourth-quarter results for fiscal 2025. When the numbers dropped before markets opened on February 3, 2026, investors were expecting a decent finish to a tough year, but the reality was starkly different.

The stock plunged 17% in pre-market trading as per Google Finance, a move that reflected deep investor disappointment not just in the quarterly results themselves but in the outlook and strategic direction the company outlined alongside them. This wasn’t the modest reaction of a single bad quarter, but the market’s rebuke of a business grappling with slowing growth, competitive pressure, and internal leadership challenges.

Let’s break down with this blog the key takeaways from this earnings report, what went wrong, and where analysts see the stock heading next.

Earnings Snapshot: PayPal Q4 Fiscal 2025 Results

Source: PayPal Earnings Release

When you look at the table above, there are a couple of things that immediately stand out.

Revenue and earnings did grow compared to the prior year, but they came in below Wall Street expectations. Revenue was slightly under what analysts had projected, and adjusted earnings per share modestly trailed estimates too. That alone would not normally drive a 17% sell-off, but in the context of slowing growth in the company’s most profitable merchant segment, branded checkout, it compounded concerns about PayPal’s longer-term growth trajectory.

PayPal Earnings vs Analyst Estimates: Misses Matter

Investors entering earnings season had expected PayPal to report about $1.28-$1.29 in EPS and roughly $8.77-$8.80 billion in revenue, based on analyst consensus going into the release. These forecasts were already modest, showing only mid-single-digit growth expectations from the Street.

However, PayPal reported $1.23 in adjusted earnings and $8.68 billion in revenue, missing both expectations. That gap between reality and expectation, even if small in absolute terms, amplified concerns given the broader narrative of slowing consumer spending, increased fintech competition and a fading “growth story.”

Why The PYPL Stock Fell So Hard

The 17% drop in pre-market action was the immediate market reaction to several converging factors.

• Earnings Miss and Guidance Weakness: PayPal failed to hit revenue and EPS projections at a time when investors were hoping for a pickup in growth. The lower-than-expected profitability narrative intensified selling pressure.
• Slowing Branded Checkout Growth: One of PayPal’s most valuable segments, branded checkout, posted only about 1% growth on a YoY basis, disappointing many analysts who were expecting stronger adoption.
• Weak Profit Outlook for 2026: Management indicated that profit for the upcoming year may grow only modestly, or even decline slightly versus estimates that had expected more robust expansion. This tone made investors reassess their positioning in the stock.
• Leadership Shake-Up: Perhaps most importantly, PayPal’s board announced that CEO Alex Chriss will be replaced by former HP head Enrique Lores effective March 1, signalling urgency but also acknowledging execution was not meeting expectations. CFO Jamie Miller will serve as interim CEO until Lores formally takes over.

This executive change, while potentially positive longer term, immediately raised concerns about strategic stability at a time when competition is intensifying from players like Apple Pay, Google and even traditional card networks leaping into digital payments.

PayPal CEO Comments and Company Messaging

PayPal’s leadership acknowledged challenges in the earnings release and in commentary around the results. The company cited macroeconomic pressure on consumer spending and elevated competitive intensity as drags on growth.

In announcing leadership changes, the board emphasized that the pace of change and execution “was not in line with its expectations”, underscoring that PayPal needs a sharper strategic focus.

Those comments underscore a pivotal moment for the company: management is acknowledging the need to pivot faster and innovate more aggressively if PayPal intends to regain investor confidence.

What to Look Out For Next

The next few quarters will be critical for PayPal for several reasons:

• Implementation of New Leadership: How quickly Enrique Lores can shift strategy and reinvigorate growth will be under scrutiny.
• Guidance Updates: Investors will be watching PayPal’s guidance for Q1 and full-year 2026 to see if growth narratives strengthen or deteriorate further.
• Branded Checkout and Venmo Momentum: Growth in those segments will be key. Branded checkout in particular is a barometer of how well PayPal is competing with digital wallets and embedded payment solutions.
• Analyst Revisions and Price Targets: Consensus on PayPal’s 12-month price target and future earnings consensus is likely to shift as analysts digest this earnings miss and management changes.

Closing Thoughts

Today’s sell-off in PYPL stock is a clear reminder of how quickly market expectations can shift when results fall short, even marginally, in a low-growth environment. The company’s miss in revenue and EPS, slowing growth in branded payment services, and a major leadership overhaul all contributed to a volatile market reaction.

For investors, the next few earnings cycles and strategic updates will be critical in determining whether PayPal can pivot back to sustained growth or will continue to confront headwinds in an increasingly competitive digital payments landscape.

Disclaimer:

The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. The securities quoted are exemplary and are not a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument. Readers are encouraged to verify the exact numbers and financial data from official sources such as company filings, earnings reports, and financial news platforms and to conduct their own research, and consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to an exchange investor redressal forum or arbitration mechanism. INDmoney Global (IFSC) Private Limited,Registered office address: Office No. 507, 5th Floor, Pragya II, Block 15-C1, Zone-1, Road No. 11, Processing Area, GIFT SEZ, GIFT City, Gandhinagar – 382355.