PayPal CEO Enrique Lores is betting on a standalone turnaround after a takeover approach from Stripe and private-equity firm Advent International went nowhere. The pair had offered about $60.50 a share, a reported $53 billion, before walking away in late August after PayPal’s board rejected the overture, Yahoo Finance reported. It has been speculated that the board wanted $70 a share.
“We have said that we are totally open and objective to evaluating the plan that we have versus external offers,” Lores told Yahoo Finance at the Goldman Sachs Communacopia & Tech Conference. “We will always choose whatever provides more value. We have three growing businesses, three businesses where we can increase the value and the profit that we generate.”
The market isn’t convinced yet. PayPal shares, which topped $62 on the takeover news, fell back to about $53, and the stock is down 81% over five years. “They trade like a melting ice cube,” Keefe, Bruyette & Woods analyst Sanjay Sakhrani told The Wall Street Journal. “The investment community is suspect because they just haven’t executed for a long time.” The Journal noted that deal talks could still restart.
The standalone plan rests on a $1.5 billion run-rate cost-savings program and a $6 billion share buyback, along with a push to streamline PayPal into three business units and unify its Braintree, Hyperwallet and PayPal Complete Payments platforms. Lores doesn’t expect the results to show before 2027 at the earliest, according to Yahoo Finance.
The two consumer products get the most attention. For the PayPal checkout button, whose usage has plateaued since Apple Pay and Google Wallet became the dominant digital wallets, Lores wants better rewards and a smoother experience, the Journal reported. Venmo, which is popular but generates meager profits, is meant to become a one-stop money-management app with budgeting and investing tools. Lores has told investors he sees it as similar to SoFi and Chime. Venmo already offers crypto trading, debit and credit cards, and rewards on balances held in PayPal’s PYUSD stablecoin, and the company has said a buy-now-pay-later feature is coming soon.
Lores, 61, spent decades at HP, where he rose from engineer to CEO and designed the company’s breakup. He was PayPal’s chair before moving into the CEO job. His pay plan includes a $25 million bonus if the stock averages above $68 for 60 days and more than $60 million if it averages $125.
There are some early signs of progress. In its second quarter, PayPal’s revenue rose 5% to $8.68 billion and the company raised its profitability outlook. At the time, Lores said that “branded checkout has further stabilized” and that the company was building on momentum in Venmo and Braintree.
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