Friends,
A simple question for those with bigger brains than Monkey:
I own both SQ (8% positon) and PYPL (3%), but have recently become unsure why I ought to own PYPL at all. Diversification, sure, but since I have a higher conviction in SQ having much more room to grow, (i.e. 14.3B market cap vs. 95B market cap for PYPL) why do I continue to own Paypal?
I know lots of Foolish financial-sector-investors who own both Visa and Mastercard and Paypal, and see no reason to own only one of them. What’s the most obvious difference between Paypal and Square that would make Paypal either redundant or the obviously worse investment?
Is SQ so much better an investment than PYPL that we ought not consider PYPL at all? Is Monkey foolish in having some of his capital tied up in PYPL (current gains sit at 100+% so it wasn’t an entirely stooopid idea) while SQ keeps on keeping on?
Thoughts?
Monkey (long SQ & PYPL)
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Square has a $20B market cap, not $14b, fyi.
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PayPal makes it really easy to buy things online. Even easier than a credit card because you just have to click on “Pay with PayPal” button. Whole different market place than the food vendors and farmers markets that are using Square and their smartphones or tablets to charge your credit cards.
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I too have a little bit of both. About 3% each. Both are great companies and are in my view the best growth stories in the Global Cashless Society trend.
Both have performed very very well for me.
Not sure I can answer which one is a better investment they mean different things to the market. Moneyslob mentions a big reason PayPal has been growing and that is easy integration across platforms for online and mobile payments. PayPal also is bringing the Cashless revolution internationally in a way Square is not (at least not yet).
Square is one of those products that has really changed the way people commerce. All those shops I used to say “d’oh they only take cash and I don’t have any on me, so I’ll go to shop 2” now take cards. And it’s easy and affordable. We used it for the Cub Scout popcorn fund raiser and it was great. Each parent could pass along the stripe reader, plug it in, download the app, sign in and start selling to all those Walmart shoppers who don’t have cash. It’s really a disruptive product. One that if Square were to disappear tomorrow, people (in the US at least) would miss it immediately. They are also expanding into small business SaaS products and now attracting larger scale customers.
I think both are great investments and I can’t find a legitimate reason to sell either. Square trades at a premium as does PayPal (though not as much) but Square probably has a better chance of growing faster and returning better due to its TAM and CAP.
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I think there’s room for both - Paypal is consumer focused whilst square is more merchant focused. Would love the 2 to merge.
Ant
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What’s the most obvious difference between Paypal and Square that would make Paypal either redundant or the obviously worse investment
Venmo. It’s the way millenials send each other money. My friend uses it to collect rent on his houses. I have also been on websites where you are redirected to PayPal to pay with your Visa, because PayPal hands all the mess for the small vendor. I believe it has a good global presence as well.
Square certain seems like it will grow faster, but if you want a little diveristy in the payments group, PayPal is a good stock.
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