Group 1 - PayPal's stock closed at $41.70, down 20.31% after Q4 2025 earnings and 2026 profit guidance missed expectations, with trading volume reaching 139 million shares, about 792% above its three-month average [1] - Q4 2025 revenue was $6.7 billion and adjusted earnings per share (EPS) were $1.23, both missing analysts' estimates, leading to a cut in profit outlook for the year and withdrawal of 2027 targets [3] - The sudden departure of CEO Alex Chriss was announced, with Enrique Lores, former CEO of HP, set to replace him [4] Group 2 - The S&P 500 slipped 0.84% and the Nasdaq Composite fell 1.43%, reflecting broader selling in growth names, with sector rival Fiserv closing down 7.66% as investors reassessed payment stocks after PayPal's weak outlook [2] - Despite the recent challenges, PayPal remains a leader in the digital payments space, and the leadership change is a common response when companies fail to meet expectations [5]

Core Insights - Longleaf Partners Fund reported a return of 3.35% in Q4 2025, outperforming the S&P 500's 2.66% but underperforming the Russell 1000 Value Index's 3.81% return, indicating a challenging year without standout performers [1] - The firm emphasizes strengthening portfolio outcomes rather than chasing short-term winners, advocating for a focus on real companies during periods of excessive speculation [1] Company Performance - PayPal Holdings, Inc. (NASDAQ:PYPL) was identified as a performance detractor in 2025, with a one-month return of -4.88% and a 52-week loss of 38.04%, leading to a market capitalization of $54.337 billion [2][3] - Despite operational progress in stabilizing transaction margins and improving cost discipline, PayPal's growth in branded checkout volume was disappointing, leading to negative market sentiment [3] Market Sentiment and Hedge Fund Interest - PayPal is not among the 30 most popular stocks among hedge funds, with 86 hedge fund portfolios holding the stock at the end of Q3 2025, a slight decrease from 89 in the previous quarter [4] - While acknowledging PayPal's potential, there is a belief that certain AI stocks present greater upside potential with less downside risk [4]