PayPal CEO's Benmo Revival Plan Meets Cold Market Response

PayPal shares have declined following the collapse of merger talks with payment startup Stripe. CEO Enrique Lores has proposed elevating the peer-to-peer remittance app Benmo into a comprehensive financial platform while reviving PayPal's core payment services, but the market response remains lukewarm.

According to the Wall Street Journal, Stripe and Advent International had offered $60.50 per share, totaling over $53 billion, in July. Before the acquisition reports surfaced on July 14, shares traded at $47.37; they rose to $55.52 the next day, peaking at $62.30 on August 20. However, after negotiations broke down due to price disagreements, shares plummeted 12.7% to close at $53.66 on August 28 and remained around $53.81 as of September 15.

Lores, who has been CEO for six months, aims to transform Benmo into a full financial platform with banking licenses in Utah, offering budgeting, savings, investment, and payment services. The app already supports cryptocurrency trading, PYUSD stablecoin storage, and check/credit card services. PayPal plans to add buy-now-pay-later features and launch three new products within a year.

PayPal also intends to revitalize its stagnant core payment business by improving rewards and convenience while cutting costs through organizational restructuring. However, competition is fierce as Cash App, Robinhood, Revolut, and Chime expand banking services in the U.S. market. Despite PayPal's strong brand and large user base, it has struggled to translate growth into improved profitability.

Analyst Sanjay Sakharni of KeyBanc Capital Markets described PayPal shares as 'melting ice cubes,' noting investors lack confidence in the company's execution capabilities.