PayPal Vs. Mastercard Stock: Which Is The Better Buy?

Company Update (PYPL US, MA US) (Buy)

Summary

• Both PayPal and Mastercard shares are attractive, but PayPal is a higher-risk, higher-reward proposition with multibagger potential.

• Both are attractive businesses, but PayPal is a closed-loop network, is still expanding its merchant acceptance, and has a U.S. and U.K. focus.

• Mastercard is targeting new verticals such as B2B and G2C as well as value-add services, where PayPal is still mostly focused on consumers.

• Both target a high-teens revenue CAGR and a low 20s EPS CAGR in the medium term, but PayPal has more future operational leverage.

• With Mastercard shares at $369.51, we expect a total return of 87% (17.7% annualized) by 2025 year-end. With PayPal shares at $103.65, we expect a total return of 213% (34.3% annualized).

Introduction

We compare Mastercard and PayPal , both Buy-rated in our coverage.

Mastercard shares are up 8.6% in the past year, having risen 21% since its December 2021 trough; PayPal shares have lost 62% of their value over the past year, and are at their lowest …