$SQ vs. $PYPLSo, between NYSE:SQ and NASDAQ:PYPL , which one would you choose?
I would choose SQ. Here's why:
- SQ has a well-defined base, whereas PayPal doesn't. Currently, that demand zone is $53. If you zoom out, you will see that it was a strong support between 2019 and 2020. On the other hand, PYPL has already broken below a similar $75 - $70 demand zone. Unless PayPal can climb above $70, it is trading in a range that lacks strong support.
- SQ is yet to be profitable but is getting close to it. If it turns a profit, the stock will receive a boost due to investor excitement, unlike PYPL, which is already profitable and therefore less exciting. This assessment focuses purely on human psychology and does not consider valuation. Additionally, SQ has a cult-like investor following.
- Negative sentiment on PYPL due to woke policy.
- E-commerce payment is under threat. When was the last time you used PayPal to pay for anything? I haven't used it in over five years. Maybe it's just me?
- Both companies face threats from FedNow and BNPL competition, as well as delinquency threats.
- PayPal acquired Honey for $4 billion. Have you heard of Honey or used the Honey browser extension to find deals? What is the revenue contribution from Honey to PYPL's top line? This acquisition is considered really bad. On the other hand, SQ acquired Afterpay for $29 billion. I have doubts about it, as SQ could have built a BNPL platform for a fraction of the price it paid. So both acquisitions are questionable in that sense. However, Afterpay at least complements SQ's business model, reduces time to market, and comes with an immediate customer base that contributes to its top-line growth.
So, which one would you choose?
Note: This is not investment advice.
