The stock market was having a fairly strong day on Wednesday, with all three major averages in positive territory as of 10 a.m. ET. However, fintech giant PayPal Holdings (PYPL -1.33%) was a major underperformer, with shares down by about 4%.
The reason behind today's move is news of a key executive's pending departure.
Specifically, Walmart (WMT 0.09%) announced that it has hired PayPal's CFO John Rainey to replace its outgoing CFO. Rainey will officially start his employment with the retail giant on June 6.
The move certainly makes sense. After all, Walmart has been actively expanding its business away from traditional retail, investing heavily in e-commerce, third-party marketplace, and advertising. And Rainey has been CFO of the largest e-commerce payment processor in the world.
It's not at all uncommon for a stock to drop when a key executive leaves, but it's important for investors to take a step back here.
For one thing, this doesn't feel like Rainey is "abandoning ship." Walmart is a massive company and is a step up for Rainey, so accepting the job isn't necessarily a sign that he sees trouble at PayPal. Unless other key executives start to depart, there's no immediate cause for alarm. And second, it's not yet known who PayPal will hire to replace Rainey, which is a very important piece of the puzzle.
The bottom line is that Rainey's departure is understandably a disappointment to PayPal investors, but there's no reason to panic. With PayPal's first-quarter earnings due out in a couple of weeks, investors will get a closer look at how the business is performing, which will be much more important to the long term than who is currently occupying the CFO office.