PayPal CEO’s first year was praised by Wall Street, but hard part starts now for struggling payments company
Alex Chriss, CEO of PayPal Inc.
Courtesy: PayPal
In January, about a hundred days into his job as PayPal CEO, Alex Chriss told CNBC’s David Faber that the payments company hadn’t had much to celebrate in recent years. But Chriss confidently said he was prepared to “shock the world.”
“I love being an underdog,” Chriss said in an interview on “Squawk on the Street,” from the floor of the New York Stock Exchange. He was responding to a question about a recent spate of analyst downgrades.
Dan Dolev of Mizuho Securities was among the skeptics. He cut his rating to the equivalent of a hold on Jan. 16, the day before Chriss’ CNBC appearance, headlining his report, “PayPal faces competitive pressure from ‘A’ to ‘Z.'” The A was for Apple Pay, and the Z represented payments app Zelle, a money transfer service jointly owned by seven of the top U.S. banks.
A few weeks later, PayPal issued weak guidance in its fourth-quarter earnings report, knocking the stock down 11% and justifying Dolev’s concerns.
PayPal appeared to be in deep trouble. Its market cap was down more than 80% since peaking in mid-2021. The company had just cut 9% of it workforce, about 2,500 jobs, and was mired in single-digit growth. Analysts across Wall Street saw rising competition and a declining take rate, or the percentage of revenue PayPal keeps from each transaction.
Fast forward to today, and the picture is dramatically brighter for the 26-year-old Silicon Valley company and its 47-year-old CEO.
Chriss hit his one-year anniversary at the helm on Friday. In the third quarter, which ended on Monday, PayPal shares jumped 34%, their biggest quarterly rally since mid-2020, when the early days of the Covid pandemic fueled a surge in online shopping. It was the first time in eight quarters that PayPal outperformed the Nasdaq, which gained just 2.6% in the past three months.
Dolev bolstered his rating back to a buy in May. In July, the company lifted its full-year profit forecast for a second time and increased share repurchases. Chriss said in the earnings release that the company was now “operating from a position of strength.” The stock rose almost 9%, its best day since late 2022.
“I think he’s been nothing but a phenomenal success story so far,” Dolev said. “The news flow has been out of this world amazing, in terms of the way they manage expectations.”
Susquehanna’s James Friedman lifted his rating on PayPal to a buy in early July. He said Chriss was “setting the bar high” with his comments on CNBC, but said he’s been delivering on his bold promise to shareholders.
“You know how he shocked the world?” Friedman said. “He actually beat his numbers.”
Much of Chriss’ early success has been tied to improved transaction margins and better monetization of key acquisitions like Braintree, which is used by Meta for credit card processing, and payments app Venmo, which is becoming more popular with businesses.
Having cut a lot of the fat in the organization and with a renewed focus on profitability, Chriss has finally sparked some excitement on Wall Street after replacing Dan Schulman, who retired following almost a decade as CEO.
“It was time for some new blood at PayPal,” said Dana Stalder, a startup investor at venture firm Matrix Partners who served as PayPal’s commercial chief from 2004 to 2008. “He’s made a lot of changes very quickly, and I think he has substantially increased the focus on the consumer, which is the right thing.”
‘Wholesale changes’ in leadership
Now comes the harder part — reigniting growth.
Analysts are projecting roughly 6% revenue growth when PayPal reports third-quarter results in about a month, according to LSEG. For the fourth quarter, they expect growth of 5.5%. Sales are only expected to get marginally stronger in 2024, with analysts expecting growth of under 8% for the full year.
PayPal didn’t make Chriss available for an interview for this story.
In the July earnings call, Chriss said of the firm’s next steps that “while change takes time and we still have much work ahead of us, we are well positioned today, have the right leadership in place and are moving full steam ahead.”
Chriss, who spent 19 years at tax software provider Intuit prior to joining PayPal, took little time before he started overhauling the management team. In November, he brought in Isabel Cruz from Walmart as chief people officer, Michelle Gill from Intuit to run a new small business and financial services group, Diego Scotti from Verizon to oversee the consumer group as well as marketing and communications, and Jamie Miller from EY as CFO.
“He has turned over, from what I can tell, the vast majority of the leadership team,” Stalder said. “It’s been wholesale changes.”
Early in his tenure, Chriss publicly identified some of the reasons, in his view, that PayPal had been struggling to find its footing. He highlighted an overly aggressive strategy of expansion through deal making.
“We have done too many acquisitions over the last few years, and we’ve been defocused,” Chriss said in the January interview with Faber. “It was one of the things I noticed when I came in 100 days ago.”
Chriss added that the company had narrowed down its priorities to five key things, “all focused on profitable growth.”
The most important metric to fix, he said, was transaction margin dollars, which is how the company gauges the profitability of its core business. Among Chriss’ strategies to address the deteriorating margin was to offer merchants increased value-added services, such as connecting a couple of data points at checkout to drive down the rate of cart abandonment.
He said in January that 35 million merchants use PayPal and “when we improve their conversion rate, it improves their business, it improves our bottom line.”
PayPal noted to shareholders in its latest earnings report that its branded checkout, along with Braintree and Venmo, helped the company achieve its highest growth rate in transaction margin dollars since 2021. Overall transaction margin dollars increased 8% to $3.6 billion.
Susquehanna’s Friedman says a career at Intuit is the perfect training ground for learning how to mastermind a stock recovery. Speaking to executives there is like “talking to a dashboard,” he said.
“The source code to engineer a higher stock is profitability,” Friedman said. Chriss “really boils down his management style to the things that count” and “reducing what’s irrelevant,” he added.
With Venmo, the goal is to turn one of the most popular choices for money transfer from a strictly consumer app, which has no transaction fees, to a product for merchants. DoorDash, Starbucks and Ticketmaster are among businesses now accepting Venmo as one way that consumers can pay.
Singing at the gas pump
Getting competitive at the point-of-sale is another big priority. That’s led PayPal to Will Ferrell.
The company launched a national campaign last month for PayPal Everywhere, offering 5% cash back for using a PayPal debit card within the mobile app. Ferrell, the pitchman, can be seen in a commercial using the PayPal app to buy lemonade and gas, while singing a parody of Fleetwood Mac’s “Everywhere.”
Stalder says PayPal is way behind Apple and Google, which own the dominant smartphone operating systems with their own embedded digital wallets.
“PayPal has been stuck because it’s less convenient than the mobile wallets, number one,” Stalder said. “And number two, it hasn’t worked offline.”
But Stalder sees a real opportunity for PayPal, in part because Apple has just opened the Secure Element on iOS so that other developers can more easily use the phone for contactless payments, putting them on a more equal plane with Apple Pay.
That development allows PayPal to “ride the mobile wallet rails for the first time and make some real headway in offline payments,” Stalder said.
PayPal’s other point-of-sale effort is called Fastlane, a one-click payment option for online sales that can go head-to-head with Apple Pay and Shop Pay by Shopify. In August, fintech platform Adyen made Fastlane available to businesses in the U.S., and said it plans to expand the offering globally in the future.
Chriss told investors on the earnings call that the company is urgently pushing to meet the holiday rush.
“We need to get it on as many platforms as we can so that small businesses in particular can just one-click a button and turn it on for the holidays,” Chriss said. “We’re working with many of our large enterprises who want access to this before the holidays as well.”
‘No drama’
Chriss’ long history at Intuit gave him an intimate understanding of the expansive world of small- and medium-sized businesses. That experience could be crucial as PayPal targets SMBs with its various payment and checkout options.
Sanjay Sakhrani, an analyst at KBW, said going further down market allows PayPal to command better economics because there’s so much more competition when going after enterprises.
“To the extent that they can broaden their reach there, I think that could be quite lucrative,” said Sakhrani, who has a buy rating on the stock.
Chriss calls SMBs an “untapped opportunity for us,” adding on the earnings call that those companies don’t want to “piece together 17 different solutions.”
“Small businesses are – they’re fighting for every customer,” Chriss said in July. “They need to be able to find customers. They need to be able to engage with customers, convert them, and then reengage with them.”
Venture capitalist Oren Zeev has seen Chriss work with small businesses in another capacity. They served together on the board of home design startup Houzz, whose customers include a lot of architects and contractors.
“He obviously brought a lot to the table with his vast experience with small businesses,” Zeev said. As a communicator, Zeev described Chriss as “no drama” and “respected by everyone.”
While he’s quickly captured the respect of investors, who have lifted PayPal’s market cap by over $20 billion in the year since Chriss started, there’s a lot more to do.
The stock remains about 75% below its record high. Sakhrani says shareholders are “anxiously awaiting his multiple-year outlook” as opposed to just “trying to fix some of the stuff that was broken.”
“There’s going to be some pressure at some point in time, in the near future, for more definition around that,” Sakhrani said.
Chriss, for his part, isn’t declaring victory.
“Our teams are moving with urgency, excited about our innovation and focused on execution,” he said on the second-quarter earnings call. “We are still early in our transformation and while pleased with our progress in many areas, we know there is much more we can do and with greater speed.”
WATCH: PayPal’s crypto lead on allowing merchants to buy and sell virtual assets
The Goodwood Festival of Speed happened this weekend, and Ford’s electric SuperTruck managed to beat every other vehicle, gas or electric, to the top of the hill.
The Goodwood Festival of Speed is a yearly event on the grounds of Goodwood House, a historic estate in West Sussex, England. The event started in 1993, and has become one of the largest motorsports festivals in the world.
Many companies attend Goodwood to debut new models, and enthusiasts or race teams will show off rare or customized vehicles or race unique cars.
One of the central features of the event is the Goodwood hillclimb, a short one-way race up a small hill on the property. The track is only 1.17mi/1.89km long, with a 304ft/92.7m uphill climb. It’s not a particularly taxing event – merely a fun way to show off some classic or unique racing vehicles.
As is often the case, companies brought out several interesting EVs to the event, including Honda’s Super EV concept, the recently-unveiled Hyundai Ioniq 6N, and the upcoming Porsche Cayenne EV, still in camouflage after recently setting an SUV record at another UK hillclimb.
Many of these cars came just to show off, to do a demonstration run up the hill and join the company of the world’s most exotic hypercars.
But some cars show up for the glory, and join “the shootout,” the sprint up the hill for the best time.
And Ford didn’t come to show off, it came to win. And in order to win, it brought…. a truck.
Ford’s SuperTruck is a one-off, 1,400+ horsepower prototype electric vehicle, supposedly based on the F-150 Lightning, but in fact bearing almost no similarity or even resemblance.
It’s been festooned with aerodynamic elements all about, lowered, equipped with race tires, and power output has been boosted to the aforementioned 1,400hp. It was driven by Romain Dumas, who Ford have been using since 2022 to drive their electric prototypes.
For the purposes of a hillclimb, perhaps the most important aspect is the Ford’s electric drive. Hillclimbs are a popular form of racing in Britain, and often consist of a short sprint up a small hill, showcasing acceleration and nimbleness more than anything.
Electric cars do well in this sort of racing due to their instant low-end torque, being able to jump off the line faster than the gas competition. They also tend to have plenty of torque, which helps with carrying them up the hills involved.
EVs do well on longer hillclimbs too, because as races reach higher and higher altitudes, gas cars suffer from reduced power due to less oxygen being available for combustion. EVs don’t suffer from this, so they tend to do well at, say, Pike’s Peak hillclimb – which, incidentally, Ford also brought its SuperTruck to, and also beat everybody at.
This year was not the first time Ford has brought a ridiculous electric chonker to Goodwood. Last year, it brought the SuperVan, which has a similar powertrain to the SuperTruck, and also beat everybody.
The SuperVan’s main competition last year was Subaru’s 670hp “Project Midnight” WRX, piloted by Scott Speed, who Dumas handily defeated by over two seconds, 43.98 to 46.07. And this year, the SuperTruck’s main competition was… the same Subaru, piloted by Speed, who Dumas handily defeated by just under two seconds, 43.23 to 45.03.
Ford did not, however, set an all-time record with the SuperTruck, in fact coming in fifth on the list of fastest runs ever. In front of it are two gas cars and two electric – the gas-powered Gould GR51, a tiny open-wheel race car, with a 42.90; an F1 car driven by Nick Heidfeld that set a 41.6 in 1999; the electric VW ID.R, also piloted by Dumas with a 39.90 (which broke Heidfeld’s 20-year record); and the all-time record holder the electric McMurtry Spierling “fan car,” with a mind-blowing 39.08 in 2019.
You’ll notice something similar about all of these – they’re all small racecars that are actually built for speed, whereas the truck is… a big truck. And yet, Ford still managed to beat every single challenger this year, with its big honker of an EV, because EVs are just better.
Watch the run in full below, starting at 9:34. Blink and you’ll miss it.
And now, if Ford continues its pattern, we’re looking forward to seeing the Super Mustang Mach-E at Goodwood next year, which did well this year at a tough Pike’s Peak, getting first in its class and second overall, likely due to inclement conditions that limited running to the lower portion of the course, limiting the EV’s high-altitude advantages.
Given the Super Mustang is a real racecar, and not a chonky truck, it might even give VW’s ID.R time a run for its money (but, frankly, really has no shot at the overall record, because the Spierling’s “fans” give it an absurdly unbeatable amount of downforce).
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Environment
GM gears up to build low-cost LFP EV batteries in Tennessee after announcing new upgrades
GM is preparing to begin converting production lines at its battery plant in Tennessee later this year for low-cost LFP EV batteries. GM’s joint venture, Ultium Cells, announced additional upgrades at the facility on Monday as it prepares for a new era.
GM will build low-cost LFP EV batteries in the US
After beating out Ford and Hyundai last year to become America’s second-best EV seller, GM is widening its lead in 2025.
Ultium Cells, GM’s joint venture with LG Energy Solution, announced plans to upgrade its Tennessee battery plant on Monday as it prepares to introduce lower-cost lithium-iron-phosphate (LFP) battery cells.
The upgrades build on the $2.3 billion investment announced in April 2021 to convert the facility into a key EV and battery hub. The company initially said the Tennessee plant was “at the heart of GM’s EV strategy,” but that was also when GM was still committed to an all-electric future.
GM will begin converting production lines to accommodate the lower-cost LFP batteries at the facility later this year. By late 2027, the company expects to start commercial production.
With LFP batteries, GM said it’s “targeting significant battery pack cost savings compared to today’s high-nickel battery pack while increasing consumer EV choice.”
The Spring Hill, Tennessee, plant currently employs around 1,300 employees. With the ability to produce multiple chemistries, GM said the facility will “guide the next phase of” its battery strategy.
After choosing Spring Hill for its LFP batteries, the next step, according to GM, is finding a home for lithium manganese-rich batteries. GM recently announced plans to become the first company to produce LMR prismatic battery cells at commercial scale.
Meanwhile, GM’s Warren, Ohio, plant will continue producing NCM batteries, which it says have helped it unlock over 300 miles of range.
Electrek’s Take
GM’s electric vehicle sales more than doubled in the second quarter, led by the hot-selling Chevy Equinox EV. The company sold nearly 46,300 EVs in Q2, up 11% from last year.
Chevy is currently the fastest-growing EV brand in the US, while Cadillac claims to have already achieved “EV leader” status in the luxury segment this year. However, that does not include Tesla.
Even GMC is building momentum with the new Sierra EV, seeing strong initial demand, and Hummer EV sales are picking up.
With new, lower-cost batteries on the way, GM aims to continue narrowing the gap with Tesla. GM offers 13 electric vehicles, covering nearly every segment of the market. It already calls the Chevy Equinox EV “America’s most affordable +315 range EV,” but GM has even lower-priced models on the way, including the next-gen Chevy Bolt EV.
Ready to test drive one for yourself? You can use our links below to find Chevy, Cadillac, and GMC EVs in your area.
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Environment
Elon Musk says Tesla is going to have ‘the most epic demo ever’, but we heard that before
Elon Musk is teasing Tesla doing “the most epic demo ever”, but we heard him claim that before and nothing came of it.
On X last night, Tesla CEO Elon Musk said that he was shown something at the Tesla Design Studio and that the company will hold the ” most epic demo ever by the end of the year”:
Just left the Tesla Design Studio. Most epic demo ever by the end of the year. Ever.
I used to get excited about Musk making statements like that, but I was burned one too many times.
In 2016, Musk said this:
Our goal is, and I feel pretty good about this goal, that we’ll be able to do a demonstration drive of full autonomy all the way from LA to New York … by the end of next year.
The end of 2017 came and went without this demonstration and now in 2025, Tesla can’t do it either.
However, since Musk referenced being at Tesla’s Design Studio, where it mostly works on car designs and advanced features, people are speculating that it’s something else.
A possibility is the next-gen Tesla Roadster, as Musk has made similar comments about it in the past, but they were again about demonstrations that never happened.
Shortly after the unveiling of the next-gen Roadster in 2017, Musk talked about adding cold air thruster to the supercar to allow it to have unprecedented racing performance and even possibly hover over the ground.
In 2019, Musk told me that Tesla aimed to do a demonstration of that by the end of 2020:
5 years later, it never happened, and the Roadster was initially supposed to come to market in 2020. It has never launched.
In 2024, Musk claimed that Tesla would unveil and demo the new Roadster by the end of the year:
It also didn’t happen, and the CEO instead said that Tesla was “close to finalizing design” at the end of 2025.
Electrek’s Take
The comment about the demo makes me think of the Roadster, but it could be something else. Maybe a bot, but I’m not sure out of the design studio.
Either way, for the reasons listed above, it’s hard to get too excited.
You can’t just believe what Musk says these days. Historically, he has been wrong or lied too often, especially about upcoming demonstrations like this new comment.
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