PayPal Stock vs Block: Which Is Best?

PayPal Stock vs Block: Digital payment platforms have taken merchant services mainstream. Now, anyone can move money electronically. It’s easy and affordable for individuals and small businesses to accept credit card payments and transfer money online – an advantage that was once only available to those who could pay hefty fees.

Digital payment providers made the e-commerce revolution possible, and they are creating new opportunities for entrepreneurs to develop their customer base.

The popularity of digital payment platforms like PayPal and Block has prompted many other companies to offer competing products. For example, Apple Pay is widely accepted at point-of-sale locations, and Zelle is a popular method of transferring money between individual bank accounts.

Though there is heavy competition for every customer in the fintech space, PayPal and Block’s Square remain the leaders in their respective markets. PayPal has nearly 42 percent of the online payment processing market, and Square controls more than 24 percent of the POS Systems market.

That leaves investors with a big question. When it comes to PayPal stock vs. Block, which is best?

Why Did PayPal Stock Go Down?

Though PayPal is a well-established company, it wasn’t immune to the tech selloff in 2022. Year-to-date, PayPal stock is down almost 60 percent. However, that drop isn’t attributed to any weaknesses in PayPal’s business. It is due to a combination of external economic factors like inflation, rising interest rates, and fears of an impending recession.

In fact, PayPal has delivered increasingly more impressive results in 2022, despite economic conditions. It is still on top in terms of users, with more than 400 million accounts, and it continues to expand its customer base at a steady rate.

Looking towards year-end results, PayPal’s management expects new accounts to total 10 million in 2022, and they have suggested sales will continue to grow in the double-digits for the full 12-month period.

Aside from its strong brand, PayPal has a number of advantages over the competition. One of the biggest is its ability to flex and adapt as consumer needs change.

PayPal was a pioneer in the digital payments space when it launched in 1998, and it continues to be a company that embraces innovation 25 years later. When it saw the trend toward peer-to-peer payments, PayPal acquired the most successful peer-to-peer platform – Venmo.

PayPal regularly scans the fintech landscape for complementary technologies, and it enhances its product offerings by developing or acquiring software that can improve the customer experience.

More importantly, it is focused on growing customer relationships. The company recently rolled out a new all-in-one app that gives its users the ability to, among other things, make and receive digital payments, pay bills, and hold funds in a traditional savings account.

This lineup of products allowed PayPal to exceed expectations for the third quarter of 2022. Highlights from the most recent earnings report include total revenue of $6.85 billion, which is higher than the expected $6.82 billion, and earnings per share (EPS) of $1.08, which exceeds the predicted $0.96 per share.

Though 2022 has been challenging, PayPal has a long history of increasing revenue and earnings. The consensus is that PayPal stock will recover and go on to reach new highs, which means now is the right time to buy.

Is Block Stock The Same As Square?

Twitter isn’t Jack Dorsey’s only claim to fame. In 2009, three years after he launched Twitter, Dorsey founded Square. His goal was to transform merchant services and make card-reading technology accessible to merchants of all sizes. He succeeded, and Square rapidly rose to prominence in the industry.

However, over time, it became clear that the company could do more than deliver card-reading technology. It moved into blockchain technology, the foundation of cryptocurrency, and it began exploring other digital payment solutions like peer-to-peer funds transfers, small business lending, and buy-now-pay-later services.

As it moved into other areas of fintech, the decision was made to keep individual business units separate.

The company was renamed Block in December 2021 and became the parent to Square; Afterpay, a buy-now-pay-later platform; Tidal, a music streaming service; and Spiral, a company focused on advancing Bitcoin, among others.

Despite the name change, Dorsey said that the company’s mission remains the same: to “continue to build tools to help increase access to the economy.”

Block is leading the way in several fintech niches, and its success is shown in results that exceed analysts’ expectations.

For Q3 2022, Block reported total revenue of $4.52 billion, which was better than the projected $4.49 billion.

Adjusted earnings per share (EPS) came in at $0.42, though the company was only expected to deliver $0.23 per share for the quarter. Block’s gross profit totaled $1.57 billion, a year-over-year increase of 38 percent.

Strong financial results haven’t protected the company from the economic challenges of 2022. As with other tech stocks, Block went down significantly – more than 62 percent year-to-date.

Some industry experts were surprised by the decline in Block stock, considering Block’s continued growth and consistent profits. Most agree that these factors will eventually overcome economic pressures and push Block stock back up, which makes Block stock a buy.

Block Stock vs. PayPal: Which Is Best?

The decision between PayPal stock and Block stock is a difficult one. PayPal is stronger in its particular area of the market, but Block has a diverse mix of businesses that give it exposure to several potentially lucrative markets.

Block is growing faster than PayPal, and it has seemingly endless opportunities for continued expansion, but those strengths add to the overall level of risk.

There are no sure things when it comes to the stock market, but PayPal is a safer bet than most. Investors who prefer stability are better off buying PayPal stock at the current discounted price, while those who can stand a bit more risk will have the potential for higher profits with Block.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.