PayPal Splits Into Three Units and Gives Venmo Its Own Division
Synopsis
PayPal has announced a restructure into three operating units, giving Venmo its own standalone division for the first time. The move makes it easier to track Venmo's performance independently or sell it off, according to CNBC. New CEO Enrique Lores, who took over in March after the board ousted Alex Chriss, said the change is designed to accelerate growth and recommit to fundamentals. Stripe has previously been reported as exploring an acquisition of PayPal or parts of its business. PayPal shares rose 2.6% on the news but remain down about 12.7% for the year.
PayPal CEO restructures the company into three separate operating units, and Venmo payments service is given a standalone division for the first time. This move makes tracking Venmo’s performance, or cashing it out, much easier.
Key Highlights
- PayPal divides the company into three departments.
- Separating off Venmo makes it easier to track separately or even sell.
- New CEO Enrique Lores entered the position in March, after the board booted Alex Chriss due to poor results and slowing growth.
- PayPal shares closed up 2.6% on Wednesday, but the stock is over 12.7% down year to date.
PayPal splits into three, Venmo’s Off to its Own Division
PayPal said that it is reorganising itself into three independent operating units. Venmo, the US peer-to-peer payments app of choice and one of PayPal’s biggest growth stories, will be reported as its own standalone segment for the first time. The second two units will focus on PayPal’s consumer and merchant businesses, and a payments services unit that includes its Braintree processing business as well as its crypto division.
New CEO Enrique Lores, who succeeded Meg Whitman in March, meant the move to illustrate a return to basics. “No doubt there were identifiable factors that contributed to the growth slowdown,” he said in a statement. “To reach our full potential we need to re-embrace our entrepreneurial duality and recommit ourselves with a focus on fundamentals.” In an earnings call expected next week, PayPal will elaborate on its overhaul plans.
Is Venmo Being Put Up for Sale?
Separating Venmo into its own unit does more than clean up, reporting-it also makes the business significantly easier to value, track and ultimately sell. The action follows a report earlier this year from Bloomberg stating that Stripe was eyeing a potential purchase of PayPal or at least parts of it.
PayPal is so big that some analysts have said a sale of certain assets, Venmo, for example, was more likely than an outright purchase of the entire business. Nothing is confirmed, but the restructure opens every door.
A Fresh Face at the Top of Business
Enrique Lores is the second CEO PayPal has assigned in fairly short order. In March, Alex Chriss was removed as CEO following a 2026 profit forecast from PayPal that came in significantly below Wall Street estimates. The company faced its growth slowing and competition from tech giants and newer fintech rivals pulling business from its payments core.
PayPal’s stock is down about 12.7% so far this year, despite a 2.6% gain on Wednesday after the restructure announcement. This marks Lores’ first major strategic push as well as his intent.
FAQs
- What are the 3 new business units that PayPal has created?
PayPal has Venmo (although it's now being spun off) division, consumer + merchant org, and a payments services section of the business that serves Braintree and an amalgamation of the cryptocurrency biz.
- Could Venmo be sold?
Arguably, once split off from PayPal as a standalone, it can be much easier to value and disentangle from the acquiring company. Stripe is one of the companies that was reported to acquire PayPal assets.
- Why did PayPal change CEOs?
It was a tough 2023 for PayPal, which pushed out its powerfully innovative chief executive Alex Chriss last March after profit estimates were driven downward.
- How are PayPal shares performing?
Gained 2.6% on Wednesday following the announcement but continues to be down around -12.7% for the year so far.
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At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
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