PayPal’s new CEO faced a point

PayPal is turning to a veteran Silicon Valley executive to revive its fortunes.

Enrique Lores, who has led HP since 2019, is taking over as chief executive this month as the payments giant faces slowing growth, increasing competition and a stock price down nearly 80% from its peak five years ago.

Lores replaces former Intuit executive Alex Criss, who was brought in less than two years ago to lead the turnaround. Chris was tasked with jump-starting the business amid a slowdown in retail spending following the pandemic, as households burdened by higher costs and interest rates pulled back on non-essential items. PayPal’s board concluded that the pace of change under Chris had fallen short of expectations.

Lores, who is chairing PayPal’s board through July 2024 and will also assume the role of chairman, is known for operational discipline. His decades-long tenure at HP took him from engineering intern to top executive, including overseeing the split of HP from Hewlett Packard Enterprise in 2015, working toward reforming the PC market, and pivoting the company’s global supply chain away from China.

PayPal faces pressure on several fronts. Branded checkout growth — the company’s most profitable and closely watched metric — dropped to 1% in the fourth quarter from 6% a year earlier, as Big Tech rivals like Apple and Google as well as buy-now-pay-later entrants like Klarna and Affirm gained traction with both merchants and consumers.

While the company is racing to reduce its reliance on checkout fees by growing its debit card business and extracting more value from its peer-to-peer mobile payments app Venmo, analysts warn that strategy may not be enough. Loreas faces the challenge of updating legacy payments players as AI-powered commerce tools — such as systems built by OpenAI and Stripe embedded in platforms like Shopify — allow users to find, compare, and buy items without leaving the chat.

In his first statement as CEO, Lores accepted the mandate to modernize or risk obsolescence. Additionally, they will also have to win back the trust of shareholders, who were initially skeptical that the hardware and supply chain giant could lead the digital pivot. News of his appointment, which came on the same day that PayPal reported fourth-quarter profit and revenue that beat estimates, sent shares falling as much as 19%.