A Fresh Start for PayPal: New CEO Set to Take the Helm

PayPal (ticker: PYPL) is gearing up for a significant leadership change as it looks to turn the tide following a challenging period. On September 27, Alex Chriss, a former executive at Intuit (INTU), will take over as the chief executive, succeeding current CEO Dan Schulman. Although Schulman will remain on PayPal's board until May 2024, Chriss's appointment marks a new era for the payments giant.

In recent years, PayPal has faced its fair share of difficulties. Despite experiencing growth during the pandemic, the company witnessed a sharp decline in its stock value, plummeting over 75% in the last two years. Fintechs, including PayPal, have struggled to capture investor interest, and increasing competition from Apple (AAPL) has added further pressure. Additionally, PayPal's margins have weakened as growth in its branded checkout business has slowed.

With Chriss taking the reins, both PayPal and its investors are hopeful for a fresh start. However, a successful turnaround will require time and effort, as acknowledged by Wall Street.

Analyst Lisa Ellis from MoffettNathanson recently downgraded PayPal shares to Market Perform from Outperform, citing concerns about the company's profitability and competition from Apple. Ellis expressed her expectation of lackluster gross profit growth for PayPal, foreseeing potential downside to current estimates. Between 2018 and 2021, PayPal experienced double-digit gross profit growth which has since stagnated, resulting in underperformance compared to the broader market.

In addition to profitability challenges, Chriss will also face the task of filling key positions within PayPal's leadership team. Currently, there are multiple vacancies or interim appointments for crucial roles such as chief operating officer, chief financial officer, treasurer, and chief strategy officer. Attracting top-tier talent amidst PayPal's ongoing challenges may pose a significant hurdle.

While the arrival of a new CEO signifies a fresh start for PayPal, it's important to recognize that meaningful change takes time. With Alex Chriss at the helm, PayPal and its stakeholders remain optimistic about the future.