On 1/17/2024, the new CEO of PayPal gave the first public interview since he took over. The chat made waves in the investing world and sent the stock soaring after the fighting words: we’ll shock the world.

Alex Chriss teased up the product event on 1/25/2024 and implied that it would be a hinbinger of what investors could expect from the iconic company moving forward. On the event day, PayPal introduced essentially these new features:

• Faster checkout that features Fastlane by PayPal and passwordless
• Smart Receipts, which enable merchants to feature products on receipts and generate post-sale sales
• PayPal Advanced Offers Platform, which allows merchants to target shoppers with relevant offers using PayPal’s first party data
• PayPal mobile app‘s revampt with more focus on rewards
• Improved Venmo Business Profiles

You can see more details here.

Let me start with what I like about these recent developments at PayPal. I like the fighting spirit and the orientation towards product development. The new features are aimed towards enhancing shopper experience and providing more value to merchants, the two key stakeholders of PayPal.

But that’s pretty much everything positive I can say about the interview and the event.

The passwordless and expedited checkout is something that we long expected from PayPal. The company has been working on it for a while and as a result, it lacked the shock element when introduced. Smart Receipts seems like a nice little feature to connect with shoppers post-sale. The problem is that it is not a needle mover. I shop using PayPal once in a while. I don’t open my PayPal receipts all the time and I never scroll down towards the end of the receipts. Even if shoppers make it to the end of the smart receipts, it’s difficult for investors to consider it a game changer, until proven otherwise with facts and numbers.

Advanced Offers Platform is intriguing. PayPal has a lot of shopper data and therefore, it makes sense that the company thinks about monetizing such data. From merchant perspective, they are obviously interested in personalizing offers and selling more. Directionally, this feature makes sense. I just wish there were more details on how it actually works. PayPal functions at the checkout stage, the last of the shopping journey. When a shopper lands on a site, how does PayPal know about a customer enough to personalize offers? Also, what is the mechanism to deliver sponsored product listings? Will they be banners on the side or up top? How does it work?

Improved Venmo Business Profiles is a nice tough and frankly long overdue. But because Venmo only generates around $1 billion in revenue, a minority of PayPal’s turnover, this change is not significant in the grand scheme either.

The presentation was littered with jargon and sounding-nice-yet-add-little words. The whole deck was a lame copycat of Apple’s product showcase style. The hype and the big words failed to mask the underwhelming nature of the true content of the event; which was unsurprisingly the reason why the stock slid afterwards.

Although I understand that a big part of a CEO’s job is to sell and Chriss, as a new CEO, passionately wants to show what he can do as the man in charge, this is a classic example of “you bite more than you can chew”. PayPal betrayed investors’ trust in the last few years after withdrawing guidance and squandering the opportunity that the pandemic gave them. I don’t think it’s wise for the new CEO to over-promise and under-deliver.

If I were Chriss, I’d dial back the tendency to make bold claims. Instead, I’d focus on executing and considering some short-term pain for long-term gain. Specifically, I’d lower the take rate for branded checkout. PayPal is an incredible brand that resonates with millions of shoppers and merchants around the world. PayPal has the best authorization rate out there, but it also imposes some of the highest fees. To take share, PayPal must have competitive fees. Sure, lower take rates will hurt margin and investors may not like it. However, in the long run, having more loyal merchants and consumers in the ecosystem will benefit PayPal. There are opportunities to offer high-margin services to both merchants and shoppers to help with margin.