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Paypal vs Square: recent share price action compared

We examine Square and Paypal’s recent first quarter results in addition to each company’s year-to-date share price performance.

The e-commerce shift

Many have argued that the emergence of the coronavirus (Covid-19) has massively accelerated the adoption of e-commerce and digital payment solutions.

Indeed, Square and PayPal – two of the world’s most prominent payment companies – have both seen their share prices rise dramatically in the wake of March's coronavirus-led market sell-down.

From the lows Square (SQ) recorded in March, the company's share price has more than tripled, rising 224% to last trade at US$104 per share. Paypal (PYPL), by comparison is up a more ‘modest’ 110% from its March lows, last trading at US$172 per share.

First quarter results in focus

Examining Paypal’s first quarter results, released in May, on a year-over-year basis, the company reported:

  • Net GAAP revenues of US$4.62 billion, up 12%
  • Operating GAAP income of US$0.4 billion, down 23%
  • GAAP earnings per share of US$0.07, down 87%

Paypal also said that 20.2 million new active accounts were added in Q1.

Though disappointing from an earnings perspective, at the time Paypal said it had experienced elevated levels of user growth during the early parts of the second quarter, with 7.4 million new active accounts added in April – implying a growth rate of 135%. Even so, at the time the company said it expected second quarter GAAP EPS to come in between 28% to 34% lower.

According to Marketbeat, Paypal is expected to report its Q2 earnings on 22 July.

Square, a significantly smaller company than Paypal, notched up top-line growth in Q1, and like Paypal, also saw its earnings suffer. Specifically, on a year-over-year basis, Square reported first quarter:

  • Net revenues of US$1.38 billion, up 44%
  • Gross profits of US$539 million, up 36%
  • A loss of US$106 million, down from a positive net income of US$391 million in Q4 of FY19

Like Paypal, Square also noted strong trends moving into April, saying that ‘After the end of the first quarter of 2020, in April, Cash App added a larger number of net-new transacting active customers compared to March 2020.’

Moreover, the company reported that ‘We have seen existing and new sellers transition from in-person sales to online commerce, which drove strong growth in Square Online Store, with its weekly GPV up more than 5x since the launch of curbside pickup and local delivery.’

According to Marketbeat, Square is expected to report its Q2 earnings on 6 August.

Paypal VS Square: share price performance comparison

Company

5 day performance

3 month performance

YTD performance

Paypal

+2.65%

+80.23%

+59.47%

Square

+6.62%

+100.00%

+67.49%

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