Incoming PayPal CEO, Alex Chriss, is set to take on the challenging task of turning around the struggling company, according to SVB MoffettNathanson analyst Lisa Ellis. Ellis downgraded PayPal stock to market perform, citing Apple’s dominance in digital payments and increased competition from Square parent Block as key factors. Ellis predicts that PayPal’s gross profit growth will remain lackluster, especially with the growing momentum of Apple Pay benefiting from powerful network effects.
The stock market has also responded negatively to PayPal’s performance, with the stock falling 1.3% to 63.35 in early trading. In 2023 alone, PayPal stock has dropped nearly 10%.
In addition to the competitive pressure and uncertain impact of pricing strategies, the new CEO will also have to address the recent deceleration in Venmo’s growth. Venmo, a person-to-person payment service, has traditionally been seen as a source of long-term growth for PayPal, but it has faced increased competition from Block’s Cash App.
Chriss will be taking over from Dan Schulman, who will continue to serve on the PayPal board of directors. PayPal has evolved from an online checkout service to a mobile shopping and person-to-person payments service. Despite its transformation, PayPal still ranks low in comparison to other stocks in the Finance-Credit Card and Payment Processing industry group.
As Chriss steps into his new role, he’ll need to navigate these challenges and find innovative ways to revitalize PayPal’s growth and profitability in the ever-changing digital payments landscape.
– SVB MoffettNathanson analyst Lisa Ellis
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