The past three years have been challenging for PayPal, leading to an 80% drop in its stock value from its pandemic high. With its share of online payments declining, new CEO Alex Chriss is under pressure to turn things around. The company’s recent attempts to innovate, such as an “Innovation Day” conference, have been met with skepticism from investors and analysts alike. Chriss, who took over last fall after a successful tenure at Intuit, is facing an uphill battle to regain momentum for the 26-year-old company.
Despite its struggles, PayPal remains a profitable business with a large network of 220 million monthly active customers. However, more than 60% of its gross profits still come from the traditional PayPal button, which is facing slowing transaction growth. The company has struggled to modernize and integrate its payment technology, allowing competitors like Apple Pay and Shopify’s Shop Pay to gain market share. Chriss is now banking on new strategies, including the “Fastlane” product to speed up guest checkout, to drive growth and profitability.
Former CEO Dan Schulman faced criticism for pursuing multiple acquisitions that have yet to deliver significant returns for the company. Despite this, Schulman believes some acquisitions have been successful and points to ongoing efforts to integrate acquisitions like Honey into PayPal’s product lineup. Integrating Venmo with the core PayPal platform has also been a challenge, exacerbating PayPal’s difficulties in maximizing returns from its acquisitions. Schulman passed the baton to Chriss, who is now tasked with steering the company through a period of transition.
Chriss is pinning his hopes on the Fastlane product to drive growth in guest checkout transactions, a market worth trillions. While initial results look promising, analysts remain skeptical about the product’s potential profitability and long-term impact. With competition in the fintech industry intensifying, PayPal will need to navigate challenges like pricing strategies and market shifts to stay ahead. Despite differing outlooks from analysts, Chriss is focused on executing his plan to return PayPal to its former glory.
Analysts have mixed views on PayPal’s future prospects, with some expecting modest growth in gross profits over the next few years. Others believe that PayPal faces significant competitive pressures and execution risks, making it a less attractive investment compared to other payment companies. Chriss’s cautious approach to managing expectations reflects a more conservative mindset compared to earlier statements about shocking the world. As PayPal continues its journey to regain its momentum, the company will need to navigate challenges in a rapidly evolving fintech landscape to secure its position in the market.
