Before PayPal (PYPL), a pioneer in fintech, posted quarterly results, shares formed a bearish pattern. The stock briefly traded over $75 last fall, only to fall steadily.
On Tuesday, the firm posted fourth-quarter results. It missed expectations on earnings ($1.23 in adjusted EPS) and on revenue ($8.68 billion). More troubling is that the company replaced its CEO with Enrique Lores, who comes from HP Inc. (HPQ).
PayPal’s choice of CEO is perplexing. HP is a mature PC company with little similarity to PayPal’s business. Markets would have liked the company to hire someone from Visa (V) or Mastercard (MA). Even better would be an overseas hire who worked in the competitive Chinese or Taiwanese technology space.
Outlook and Caution
PayPal is forecasting non-GAAP EPS to fall in the low single digits or be positive at best. In 2025, non-GAAP EPS was $5.31. Readers should look closely at the non-GAAP versus GAAP results. For example, the reconciliation excluded transaction and credit losses of $390 million, stock-based compensation worth $234 million, and other current and non-current liabilities worth $718 million.
Your Takeaway
PayPal produces healthy free cash flow annually and is buying back stock worth 15% of its market capitalization. The buyback might not pay off for shareholders if the stock keeps falling. But it might stop shares from falling for much longer.
Tech Insider
