PayPal Braces for Leadership Change Amidst Challenges and Stagnant Growth

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PayPal Braces for Leadership Change Amidst Challenges and Stagnant Growth
Credit: © Reuters.

Monday, September 18, 2023 - PayPal (NASDAQ: PYPL ) is preparing for a significant transition as Alex Chriss is set to assume the role of chief executive on September 27, succeeding current CEO Dan Schulman. Schulman, however, will continue to serve on PayPal's board until May 2024.

The leadership change comes during a challenging period for the fintech giant. Over the past two years, PayPal's shares have plummeted by over 75%, attributable to diminishing investor interest in fintech companies, escalating competition from Apple ( NASDAQ :NASDAQ: AAPL ), and a slowdown in its branded checkout business growth.

Chriss, an experienced executive hailing from Intuit (NASDAQ:NASDAQ: INTU ), is perceived as a potential catalyst for PayPal's recovery. However, Wall Street analysts caution that the company's turnaround could be a protracted process.

Lisa Ellis, an analyst from MoffettNathanson, recently downgraded PayPal's shares from Outperform to Market Perform and reduced her price target on the shares from $85 to $75. Ellis attributed this downgrade to Apple's growing dominance in the payments sector and its implications for PayPal. She also pointed out that PayPal's gross profit growth has stagnated over the years, transitioning from double digits between 2018 and 2021 to low- to mid-single digits currently.

Ellis further emphasized that Chriss faces a formidable task of filling key roles within the company. PayPal currently has several positions either vacant or filled on an interim basis, including chief operating officer, chief financial officer, treasurer, and chief strategy officer. Amidst the company's ongoing struggles, attracting top-tier talent could be a significant challenge.

Despite these hurdles, the upcoming leadership change presents an opportunity for PayPal to recalibrate its strategic direction. However, analysts suggest that substantial changes might require time.

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