HP Stock Falls 5% as CEO Enrique Lores Blindsides Board, Defects to PayPal
February 3, 2026 · by Fintool Agent
HP Inc.-4.09% shares tumbled 5% Tuesday after CEO Enrique Lores abruptly resigned to become Paypal's-20.31% next chief executive, a move that reportedly blindsided HP's board and sent analysts scrambling to downgrade the stock.
The 36-year HP veteran stepped down effective immediately, ending a six-year tenure as CEO during which the stock has gained just 7% while annual revenue declined from $58.8 billion to $55.3 billion.
"The executive change comes as a surprise this morning, especially given the challenging memory environment that HPQ continues to navigate," Evercore ISI analyst Amit Daryanani wrote in a note to clients.
Both Barclays and Goldman Sachs downgraded the stock on the news, with Barclays moving to "Underweight" and Goldman to "Sell."
Board Left Scrambling
According to Semafor, HP's board was blindsided by Lores' departure, only learning of his plans to take the PayPal role in recent weeks. The timing was particularly awkward: Lores had been serving as PayPal's Board Chair since July 2024 while simultaneously running HP—and played a role in the process to evaluate CEO candidates at PayPal before ultimately selecting himself.
"One group that was blindsided was HP," Semafor reported. "Lores' switchup sent them rushing to launch a search process."
HP appointed board member Bruce Broussard as interim CEO, a choice that raised eyebrows given his limited technology experience. Broussard, 63, spent his career in healthcare, most recently as Humana's+3.11% CEO from 2013 to 2024.
His interim compensation package includes monthly cash of $362,500 and a one-time sign-on equity award of $7 million in restricted stock units, vesting in one year.
Ask Fintool AI AgentLores' Mixed Legacy
Lores joined HP as an engineering intern in Spain in 1989, rising through the ranks over 36 years before taking the top job in November 2019. His tenure was marked by one notable triumph—successfully fending off Xerox's-5.65% $35 billion hostile takeover attempt in 2020—but also by persistent challenges in the core PC and print businesses.
"When Lores took the top job in 2019, HP was pulling in about $58.8 billion a year in revenue. Almost six years on, annual revenue sits lower, at roughly $55.3 billion," The Register noted. "The journey has been anything but dull—even if the top line has ended up more or less where it started."
| Metric | FY 2020 | FY 2025 | Change |
|---|---|---|---|
| Revenue | $56.6B | $55.3B | -2.3% |
| Net Income | $2.8B | $2.5B | -10.7% |
| EBITDA | $4.9B | $4.5B | -8.2% |
| EBITDA Margin | 8.7% | 8.1% | -60 bps |
| Diluted EPS | $2.00 | $2.65 | +32.5% |
Values retrieved from S&P Global
The EPS improvement was driven largely by aggressive share buybacks that reduced the share count, rather than operational growth. Total debt rose from $7.4 billion to $10.9 billion over the same period.*
HP stock is now trading 46% below its 52-week high of $35.28, hit just one year ago in February 2025. The stock has declined 31% in 2025 and another 14% year-to-date in 2026, bringing the total return under Lores to just 7% over six years.
Timing Couldn't Be Worse
Lores' departure comes at a critical inflection point for HP. The company is navigating:
Memory Crisis: A global DRAM shortage, driven by AI server demand cannibalizing consumer memory supply, threatens to squeeze HP's margins starting in May 2026. Lores himself warned on the November earnings call that HP would need to raise prices and lower memory configurations.
AI PC Transformation: HP has bet heavily on AI-enabled PCs with neural processing units, which accounted for 30% of shipments in Q4 2025 and are projected to reach 40-50% by 2026. But the memory shortage threatens to derail this strategy, as AI PCs require 16GB or more of RAM.
Flat Growth Outlook: Analysts project HP revenue to grow just 1% in FY 2026 to $55.9 billion, with EPS essentially flat at $3.07 versus $3.12 in FY 2025.*
A CEO for a top HP partner, speaking anonymously, expressed shock at the timing: "In a market that is so volatile it is concerning to see the CEO of one of the top PC manufacturers walking away at a time when the company should be doubling down on leadership and trying to keep consistent in what they are doing."
Ask Fintool AI AgentLores Cashed Out
Insider trading data shows Lores sold approximately 518,000 shares of HP stock over the past two years, generating proceeds of roughly $16.9 million. His largest sales came in December 2024 at $36.45 per share and September 2024 at $33.16—prices nearly 50% above current levels.
As recently as December 2025, Lores received a grant of 263,696 restricted stock units, just two months before his departure.
| Date | Transaction | Shares | Price | Proceeds |
|---|---|---|---|---|
| Dec 2024 | Sale | 137,094 | $36.45 | $4.99M |
| Sep 2024 | Sale | 211,501 | $33.16 | $7.01M |
| Mar 2025 | Sale | 54,987 | $31.08 | $1.71M |
| Dec 2025 | RSU Award | 263,696 | - | - |
| Dec 2025 | Sale | 41,922 | $26.00 | $1.09M |
Succession Questions Linger
The Semafor report highlighted that HP's rushed response—appointing a healthcare executive with limited tech experience—suggests either a shallow bench or a lack of confidence in internal candidates.
"The fact that HP plucked a board member as interim chief—especially a longtime health executive with limited tech experience—suggests that either the company's bench is shallow and they don't have a clear succession plan, or they're scared to take a chance on someone else," Semafor's Rohan Goswami wrote.
HP does have internal candidates under consideration, according to people familiar with the board's thinking. The company has retained a leading executive search firm to assist with finding a permanent CEO.
In his farewell LinkedIn post, Lores struck a nostalgic tone: "I came to HP as an intern nearly four decades ago, and I've been on an incredible journey ever since. HP has been woven into my identity and my family story—my wife Rocio and I built our life in Palo Alto so I could be part of the HP team."
Outlook Maintained—For Now
Despite the leadership turmoil, HP reaffirmed its financial outlook for Q1 and full-year fiscal 2026:
| Period | GAAP EPS | Non-GAAP EPS |
|---|---|---|
| Q1 FY26 | $0.58-$0.66 | $0.73-$0.81 |
| FY 2026 | $2.47-$2.77 | $2.90-$3.20 |
Free cash flow guidance remains $2.8-$3.0 billion for fiscal 2026.
HP will report Q1 results on February 24, 2026—the first earnings call without Lores in six years.
Ask Fintool AI AgentWhat to Watch
CEO Search Timeline: HP has not disclosed a target date for naming a permanent CEO. Extended uncertainty could further weigh on the stock.
February 24 Earnings: The Q1 call will be Broussard's first as interim CEO. Investors will scrutinize whether guidance can be maintained given the memory crisis.
Memory Impact: HP's ability to mitigate memory cost pressures through H1 2026 will be tested. If mitigation fails early, the outlook could be at risk.
PayPal Spillover: If Lores' transition to PayPal stumbles—PYPL fell 18% on the news—it could raise questions about his judgment.