A new CEO, a Venmo expansion, banking ambitions, acquisition rumours and now a lawsuit have made it quite the period for PayPal.
Investors have filed a securities class action accusing PayPal of misleading them about its growth prospects and ability to deliver on financial targets.
The lawsuit was filed on 24 March, in the US District Court for the Northern District of California. It covers investors who purchased stock between 25 February 2025 and 2 February 2026, and claims shareholders were misled about the company’s ability to meet 2027 financial targets.
On 3 February 2026, the company’s shares fell $10.63, or more than 20%, after the company withdrew its 2027 financial targets, reported “operational and deployment issues” across all regions, and announced CEO Alex Chriss would be replaced.
The decline led to the class action, with law firms Levi & Korsinsky, and Kirby McInerney representing investors.
What the complaint alleges
According to the filing, PayPal’s SEC disclosures used general risk warnings that didn’t highlight specific, known problems.
Investors were told the company faced competition and possible execution risks in broad terms, but the complaint claims the real issues inside the company were more serious.
The filing claims PayPal’s salesforce was not fully equipped to deliver on the growth targets promoted to investors, and management underestimated how quickly customers would adopt new services. Separately, interim CEO Jamie Miller acknowledged the company had been “too optimistic” about how quickly it could drive change and customer adoption across its global user base.
It also alleges these operational and deployment problems were common across the business rather than limited to a few markets, and that competitive and economic pressures were stronger than the company’s filings suggested.
“Generic risk factor language cannot substitute for disclosing specific, known problems that are already affecting a company’s operations,” said Joseph Levi, a partner at Levi & Korsinsky.
“When a company provides investors with detailed financial targets, adequate disclosure requires candor about internal obstacles to meeting those targets.”
The complaint challenges PayPal’s statements under Section 10(b) of the Securities Exchange Act and SEC Rule 10b-5, which prohibit misleading statements or material omissions to investors.
Strategic context
It has been a hectic few months at the company, with a mix of exciting developments and setbacks.
In December 2025, PayPal applied to establish PayPal Bank in the US, moving into small‑business lending and consumer savings products. Earlier this month, it extended Venmo‘s reach by connecting it to PayPal’s global network across 90 markets, and connecting the app to PayPal’s global network.
However, the biggest announcement was made on 3 February, when the company said Chriss would step down from his role as CEO, with long‑time board chair Enrique Lores appointed as his successor.
The leadership change followed what the board described as a detailed review of PayPal’s competitive position and the pace of its strategic execution.
Directors said that while Chriss had made progress, including monetising Venmo and expanding the BNPL business, the company needed to accelerate its transformation to meet market expectations.
The leadership change also led to scrutiny of PayPal’s long-term direction. David Marcus, former PayPal President argued that years of financial optimisation had weakened the company’s product-led culture and eroded its competitive edge, pointing to slowing branded checkout growth, the loss of eBay volume and rising pressure from Apple Pay and other rivals.
These operational and strategic pressures feed directly into the investor class action, with the complaint arguing that PayPal did not fully disclose the scope of these challenges when issuing its 2027 financial targets.
