PayPal Vs. Block: Which Stock Is A Better Buy? PayPal Is Far Ahead
(Preview) Company Update (PYPL US, Buy) (SQ US, Neutral)
Summary
PayPal is a good business and, with shares down 64% since July, can triple by 2025. Block is a mediocre business and a speculative stock.
For merchants, PayPal means access to incremental consumers, while Block is just one of many ways to accept Visa or Mastercard.
For consumers, PayPal and Block apps have similar features, but PayPal has a much larger user base and a global presence.
PayPal is a proven business with solid earnings and financial targets, while Block is barely profitable and faces disintermediation risks.
PayPal stock is at a reasonable 31x GAAP EPS, while Block's P/E multiple exceeds 1,300x. We rate PayPal as a Buy but Block is to be avoided.
Introduction
In this article we explain why we believe PayPal Holdings Inc. stock to be a good investment, while Block Inc. (formerly Square) stock is not.
We upgraded our rating on PayPal to Buy in May 2020; PYPL stock is now 20% lower, having fallen 64% from its peak last July. We initiated a Hold rating (meaning to avoid) on B…