Bagholders Assemble!
Post Earnings Reaction on PayPal (PYPL). All Pain, No Pal.
Disclosure: Not financial advice. Do your own research.
It’s not often you see a company announce earnings of $8.68 billion vs. $8.80 billion expected (a miss of 1.4%) and EPS of $1.23 vs $1.28 expected (miss of 3.9%), fall almost 20% in the pre-market. But it’s not surprising. Just look at their 2026 guidance.
But why is the stock down so much on these numbers?
Well it’s actually quite straightforward.
The story just changed.
The past couple years under Alex Chriss were about changing PayPal’s strategy to adapt to new technologies including leveraging AI. But now, the Board, as they described on PayPal’s Q4 earnings call, the only thing that matters now is execution.
Despite strong free cash flow, excessive share buybacks, the narrative was more important. If you’re someone who builds confidence through numbers, you dig through the arithmetic, and calculate your margin of safety, this type of experience can be eye-opening for you. It’s jarring, in fact.
Wall Street got it right. The story told more than the numbers.
And it’s not just Wall Street. Lots of retail got it right. We wrote about it.
Like Jason said, PayPal would go to around $42.55. He was right. And if his quick TA says anything about the rest of 2026, it’s not going to look pretty.
It’s like Stanely Druckenmiller always says: even if the fundamentals are good, if the charts don’t support the trade, he won’t do it. Well, the charts don’t support the trade here. A bottom needs to be found, and interim CEO Jamie Miller definitely isn’t the person to do it. As retail says:
Now, when Alex Chriss joined PayPal, he re-staffed management with people he claimed would help return PayPal to growth and “shock the world”. But it’s clear now what he should have done is cut the headcount significantly. Not just place your cronies in the c-suite, Alex.
Employees are a privilege, not something to be taken advantage of. Only the best stewards deserve employees. It’s like capital. Capital allocators are privileged to allocate capital to businesses/assets/people who will put that capital to use. CEOs and management are like the capital allocators of people, they can either put them on good tasks, on high-value work, or they can squander their valuable time. PayPal is severely wasting the precious resource that is human time.
On the call, one of the analysts asked something to the tune of “how should we think about the company? Is it a growth story or a capital returns company?” Interim CEO Jamie Miller responded by saying they have good momentum and have areas of organic growth. Common guys. There are high schoolers with more common sense for how to properly answer an analysts’s question than that. Really embarrassing.
The only call that probably tops this as of recent is Lululemon in Q3, 2025.
Anyways, best case scenario with PayPal? An activist steps in before Jamie Miller can do more damage, maybe takes PayPal private, but definitely guts the company. Actually returns capital to shareholders, because Jamie, it’s not a growth momentum story anymore, hun. The headcount should probably be reduced by 2/3. Like seriously, 24,000 employees for what? Spending $1.5 billion on customer support that can automated with AI? What a waste of precious human labor and capital.
If Elon were to take over PayPal today, he’d maybe have 2,000 people left at the company.
Maybe Enrique is the person to do that. In 2019, when he joined HP as CEO, he initiated major restructuring plans immediately reducing the headcount by roughly 7,000-9,000 people. At the time, HP had 55,000 employees when he joined. By 2021, the headcount was 51,000 (of course you need to consider replacement and hiring). Right off the bat, this doesn’t seem like enough. And HP’s investor base didn’t think so either. Enrique joined in November of 2019. HP only found a bottom in the following year at just below $14 a share, down 25% since Enrique joined.
The point is, with PayPal, the story changed. But management doesn’t seem to get it. And Jamie Miller certainly doesn’t get it, or is just outright acting with malicious intent. Who knows.
If you were an investor in PayPal prior to this earnings call, you ought to at least spend time having a retrospective on what went wrong. That retrospective starts at the top. With Alex Chriss, and his failed vision for the company.
Good luck. Peace out.
