PayPal Stock Plunges 20% After Earnings -- Is It a Buy Now?

Core Viewpoint - PayPal's fourth-quarter earnings missed expectations, but the significant news is the departure of CEO Alex Chriss, who was with the company for a short period since late 2023 [1] Group 1: Financial Performance - PayPal reported a 4% year-over-year revenue growth and a 3% growth in adjusted EPS for the fourth quarter, which are considered disappointing results [7] - The company provided disappointing guidance, projecting a decline in earnings per share for 2026 due to lower interest rates and increased investment needs [7] Group 2: Leadership Changes - Incoming CEO Enrique Lores is recognized as a strong leader, having successfully navigated a transitional period at HP and is focused on returning PayPal's branded checkout to growth [3] Group 3: Growth Initiatives - PayPal has announced several growth initiatives, including becoming the first integrated payments wallet in OpenAI's ChatGPT launching in 2026, partnering with Google for new payment solutions, and launching a rewards program for buy now, pay later transactions [6] - Additional initiatives include the rollout of Agentic Commerce Services for merchants, applying for an industrial banking charter, and a partnership with Microsoft for Copilot Checkout [6] Group 4: Valuation and Stock Buybacks - PayPal's stock is trading at less than seven times expected 2026 free cash flow, indicating a very cheap valuation [4] - The company plans to buy back approximately $6 billion worth of stock this year, which could result in the repurchase of about 15% of its outstanding shares if the current valuation persists [4]