Is Venmo or Cash App a Riskier Wealth Builder?
Written by
Chris Adam
Edited by
Nicholas Morine
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Financial technology companies continue to innovate and offer new options for customers. You’re probably using some of the products from the top fintech companies — including PayPal and Block.
PayPal is an old-timer in the fintech world — and currently owns the wildly popular Venmo service. It may be hard to believe, but it was founded back in 1998.
While a much newer name, Block is the holding company for Square and Cash App. Though you may be tempted to see PayPal as being much more established, many analysts caution against choosing it over Block simply for this reason — particularly since Block has been making changes and growing its options for consumers.
If you have trouble telling the difference between PayPal, Block and their products, you’re definitely not alone. Since they seem so similar — which stock is a better buy?
Recent Challenges Facing the Fintech Market
Let’s start here — deciding between PayPal and Block as an investment choice can be a tough decision. One reason is that the fintech world can change often and drastically. According to The Motley Fool, “Despite strong bullish momentum for the broader market in 2023, many financial technologies stocks have continued to struggle this year [2023].”
By November of 2023, PayPal had fallen 23% in the year and Block was down 19%. That means both stocks were down about 82% from their respective peaks. Of course, things can turn around quickly in the stock market, especially when it comes to the fintech world.
Risk vs. Reward: Block (Cash App) vs. PayPal (Venmo)
A big question to ask when considering stock options is risk versus reward. This is certainly true when considering PayPal versus Block.
Regarding PayPal, Yahoo! Finance said some of the risks include a decline in active user accounts and a slow rise in company revenues. On the positive side, there has been a rise in revenues and high transaction volume.
Concerning Block, one potential reward is that many analysts think the company is ready for continued growth. On the risk side, Block has experienced volatile trading in recent years.
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