PayPal Holdings, Inc. (PYPL) saw its stock price plummet more than 15% in after-hours and premarket trading following its Q4 2025 earnings report, which revealed a weaker-than-expected performance and a subdued profit forecast for 2026. The sharp decline occurred despite the company posting solid annual revenue growth and strong cash flow.
The company reported fourth-quarter revenue of $8.68 billion, a 4% year-over-year increase but below analyst expectations of $8.80 billion. Adjusted earnings per share came in at $1.23, missing estimates of $1.28. For the full year 2025, revenue reached $33.2 billion, with GAAP operating income of $6.1 billion. Total payment volume for the year processed was $1.79 trillion, a 7% increase.
A critical factor in the market's negative reaction was the company's 2026 outlook. PayPal expects full-year adjusted profit to decline in the low-single-digit percentage to increase slightly, far below Wall Street expectations of roughly 8% growth. This forecast reflects mounting pressure from slowing consumer spending, particularly in the U.S., and intensifying competition in digital payments from giants like Apple and Google.
The performance of PayPal's high-margin branded checkout business was a major disappointment. Branded checkout volume grew just 1% in Q4 on a currency-adjusted basis, a sharp deceleration from 8% growth in the previous two quarters. Analysts note that PayPal's customer base, which skews toward middle-to-lower income levels, is particularly vulnerable to a pull-back in discretionary spending.
Concurrently, PayPal announced a leadership change, naming Enrique Lores, former President and CEO of HP Inc., as its new Chief Executive Officer effective March 1, 2026. He will succeed Alex Chriss. The company stated that "the pace of change and execution was not in line with the board's expectations" under the outgoing leadership.
Despite the weak outlook, PayPal demonstrated financial strength in other areas. The company generated $6.4 billion in operating cash flow for the year and ended 2025 with $14.8 billion in cash and investments. It also launched a new quarterly dividend of $0.14 per share, marking a strategic shift toward steady capital returns.
