CEO Performs "Leave Immediately" as Analysts Flash Downgrade Rating HP Drops to Nearly 5-Year Low

U.S. stocks opened on Tuesday with notable declines, as well-known consumer electronics manufacturer HP plunged over 4%, hitting a new low since the end of 2020. In the news, Enrique Lores, who has served as President and CEO for 36 years, suddenly announced his departure to become CEO of the well-known payments platform PayPal.

As background, Lores has worked within the HP system since starting as an engineering intern at an expatriate agency in Spain in 1989, and became the company’s CEO in 2019. He is also the architect behind the spin-off of HP Inc. and the enterprise business unit, HPE.

Meanwhile, PayPal also dropped nearly 20% on Tuesday, hitting a new low since 2017. After releasing earnings that significantly missed expectations, the company dismissed CEO Alex Chriss, who had been in the role since 2023. Lores, the company’s chairman, took over as CEO on March 1, replacing interim CEO Jamie Miller, who had served as CFO and COO.

(Hp daily chart, PayPal monthly chart, source: TradingView)

PayPal clearly stated the reason for the leadership change in its announcement: the pace of transformation and execution did not meet the expectations of the board.

As chairman of PayPal’s board, Lores was naturally involved in the process of dismissing the current CEO and evaluating potential successors, ultimately choosing to step into the role himself.

In a post on a professional social platform, Lores expressed deep gratitude for HP but only briefly mentioned, “The unique opportunity to serve as PayPal’s CEO and make a profound impact on the global payments industry has reignited my passion.”

According to insiders, this change has “shaken” HP. HP’s board only learned of Lores’ departure in recent weeks, forcing them to hurriedly initiate a search for a successor.

HP also announced on Tuesday that Bruce Broussard would serve as interim CEO, and a CEO search committee has been established to find Lores’ replacement.

In response to this change, Wamsi Mohan, a senior IT hardware analyst at Bank of America, immediately downgraded HP’s rating from “Neutral” to “Underperform,” and lowered the target price from $26 to $20.

Mohan wrote in the report: “We believe this personnel change came quite suddenly, as Lores has been with HP for 36 years, although we note he has served on PayPal’s board for nearly five years.”

The analyst stated that the rating downgrade reflects multiple adverse factors stacking up amid a tightening operating environment: first, slowing growth in PC demand and shipments; second, rising memory costs putting pressure on operating margins (OM) for printing and personal systems (PS) businesses; third, the added uncertainty brought by CEO change, which could distract management’s execution and prolong strategic decision cycles.

(Source: Cailian Press)