A Tale of Two Fintechs: PayPal Drops as Block Pops

PayPal (NASDAQ:PYPL) shares sank today after Q3 earnings failed to convince investors that all is good with the payments provider. PayPal apparently reported OK Q3 numbers, but the guidance worried shareholders.

On the other hand, Block, formerly known as Square (NYSE:SQ), moved higher in after-hours trading following a Q3 reported a 17% increase in net revenue, boosted in part by its CashApp.

PayPal claimed a solid Q3 with net revenue of $6.85 billion and total tayment volume (TPV) of $337.0 billion, growing 9%. EPS came in at $1.08 per share, down 2% versus the same quarter year prior.

For Q4, PayPal said it anticipated earnings per share in the range of $1.18-$1.20, compared to $1.11 in the prior year period and revenue of $7.375 billion. Analysts were expecting revenue of $7.73 billion.

Block said that during Q3 of 2022, they generated a gross profit of $1.57 billion, up 38% year over year and Cash App generated a gross profit of $774 million, up 51% year over year, and Square generated gross profit of $783 million, up 29% year over year.

The company said that the Cash App Card “has significant momentum and has scaled to more than 35% of our monthly actives adding that in September, there were nearly 18 million Cash App Card actives, up more than 40% year over year with weekly and daily actives increasing.

Block’s BNPL platform provided a gross profit was $1.42 billion, up 25%.

Regarding Cash App Block said they are investing in “Community, Financial Services, Crypto, Operating System, Trust, Commerce, and Global. This quarter we made notable progress on the Community, Financial Services, and Commerce fronts, which meaningfully contributed to gross profit growth.”

Shares in Block jumped by 13% in after-hours trading.

In recent weeks, markets have brutally punished firms that fell short of expectations and while some have beat predictions – many have fallen later. PayPal has struggled with its messaging as of late due to recent updates and reversals in its Acceptable Use Policy, which has been deemed as intolerant by some pundits.

Many observers believe several catalysts may be in the making for a bit of a bounce. A potential Republican takeover of the House and perhaps the Senate, could send an encouraging note to the business sector. And once the Fed decides to pause its rate hikes, this could be an all clear sign – but the question remains as to when we will get there.

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