When Apple (AAPL) said that Apple Pay would offer 4.15% in interest, it shook up the established fintech firms. PayPal (PYPL) and Block (SQ) both posted good quarterly results. This failed to support the share price. PYPL stock lost 18% of its value last week. SQ stock lost 5.4%.
PayPal posted an adjusted EPS of $1.17. In Q2, its adjusted EPS is $1.15 - $1.17. It warned investors that its operating margin guidance by only 25 basis points.
Block increased its 2023 guidance, expecting an adjusted EBITDA of $1.36 billion. In Q1, it posted a strong gross payment volume of $51.1 billion. EPS of $0.40 is up from $0.22 in the prior quarter and from $0.18 last year.
Markets dumped both fintech companies. Markets expect Block’s solution to face competition in 2023. PayPal has a large retail holding at 75%. Retailers who panic sold accounted for PYPL stock volatility.
A $2,500 fine on customers for each of their “social media posts that we don't like" is not forgettable. The firm should never have posted such an idea. Customers threatened with such a fine, will flee. They could increase their cash on hand in ApplePay. Transaction volumes on Apple will soar while payments on PayPal fall.
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