PayPal in free fall: 86% down from its highs and chaos at the top. Competition from Zelle and the “mirage” of a stablecoin.

There's an old saying on Wall Street: "Markets go up the stairs and down the elevator." In the case of PayPal , it looks like someone cut the elevator cables. Shares of the digital payments giant plunged 20% on Tuesday, hitting $41.70. A resounding slump, driven by disappointing earnings, first-quarter guidance that chilled analysts, and, to top it all, a sudden and shocking CEO change.

But to understand the gravity of the situation, we need to broaden the scope. The stock has lost 86% from its all-time high, that peak of $308.53 reached on July 23, 2021, in the midst of meme-stock euphoria. PayPal thus enters the pantheon of "Implode Stocks," a not-so-exclusive club reserved for those who have lost at least 70% from recent highs.

Here is the related chart from Tradingeconomics:

The Waltz of the Chairs

The news that further shook the market was the dismissal of CEO Alex Chriss , effective February 2, 2026. He will be replaced by Enrique Lores , CEO of HP, effective March 1. In between, a transitional period was entrusted to CFO Jamie Miller. All of this happened in a rush, with a filing with the SEC leaving little to the imagination. A move that appears, to put it mildly, spooky. Lores's name wasn't particularly welcomed by the market, given that he comes from a solid company, but certainly not one with the innovative spirit expected from a Fintech giant.

But what's really happening to what was once the undisputed queen of online payments?

The fundamentals and the cutthroat competition

We're not talking about a company that's about to go bankrupt tomorrow. PayPal continues to generate growing revenue and substantial profits, extracted from each transaction through its fees and from interest on customer balances ($4.0 billion and $3.7 billion, respectively, in the fourth quarter). However, its fee-based business model is showing its cracks in the face of take-no-prisoners competition.

The digital payments landscape is now crowded: Apple Pay, Google Pay, Amazon Pay, Stripe, Wise, and the various “Buy-Now-Pay-Later” (BNPL) services have invaded e-commerce checkouts. But the real enemy, the one eating PayPal's lunch, is called Zelle .

Here's why Zelle is scary:

• Zero Cost: No commissions charged to either the sender or the recipient.
• Bank Integration: It is owned by a consortium of banks ( Early Warning Services ) and is integrated directly into the online accounts of most US customers. Its function is also to sound an alarm bell about customer creditworthiness.
• Immediacy: Transfers are instant.

While PayPal charges fixed fees and percentages that weigh on small merchants, Zelle offers a free service that's hard to beat. The numbers speak for themselves:

• In 2024, Zelle processed 3.6 billion transactions worth over $1 trillion (+27% from 2023).
• In the first half of 2025, it handled 2 billion transactions (+23% year-on-year).
• By comparison, PayPal’s total payment volume growth in 2025 was a paltry 7% .

Acquisitions and the Stablecoin “Genius Act”

Faced with this hemorrhage of relevance, PayPal has attempted to buy growth. Over the years, it has acquired Venmo, Xoom, iZettle, Honey (paid a whopping $4 billion in 2020), and Japan's Paidy. Yet these acquisitions don't seem to be enough to reverse the trend.

And then there was what was supposed to be the knight's move, or the "genius act" as some observers would ironically call it: entering the cryptocurrency world with its own stablecoin . The idea of ​​launching PayPal USD ( PYUSD ) was supposed to represent a bridge to the future, a way to modernize the infrastructure and reduce costs. However, looking at the collapse in prices, the market seems to have interpreted it more as a desperate attempt to stay trendy than as a real industrial revolution. Stablecoins are an interesting tool, but, by themselves, they don't solve the structural problem of a company charging fees in a world shifting towards free peer-to-peer payments.

Secure future, but…

PayPal isn't going away. Its cash flows are still enormous and its presence is widespread. Profits are present and remain fairly in line with previous years.

But the era of a $308-a-share valuation, inflated by post-pandemic liquidity and irrational enthusiasm, is over. The company must now face the reality of a mature market, where margins are under pressure and banking competitors have awakened from their technological slumber.

The CEO change is a sign that the board knows a change of direction is needed. It remains to be seen whether the new helmsman from HP will be able to navigate these troubled waters, or whether PayPal will remain trapped in the limbo of Silicon Valley's former glories.

The article PayPal in free fall: -86% from highs and chaos at the top. Competition from Zelle and the "mirage" of a stablecoin comes from Scenari Economici .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/paypal-in-caduta-libera-86-dai-massimi-e-caos-al-vertice-la-concorrenza-di-zelle-e-il-miraggio-della-stablecoin/ on Wed, 04 Feb 2026 14:03:06 +0000.