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PayPal stock falls on earnings, Block stock jumps on Cash App revenue

Yahoo Finance Live anchors discuss stock performance for Block, PayPal, and Coinbase following quarterly earnings.

Video transcript

[AUDIO LOGO]

- Let's talk about another area that we are watching today, and that is fintech. We've got details of two fintech shares. PayPal and Block going in opposite directions after both companies beat on the top and bottom lines in the third quarter. But PayPal's guidance worried shareholders, and Block didn't provide forward guidance but did post strong Cash App growth in particular. That's what I was seeing in analyst after analyst, who note it was all about Cash App for Block. That was something that saw a lot of traction for the company. Cash App sales, I believe, were up by 51-- or excuse me, revenue up by 12%. Maybe it was profit that was up by 51% there. So seeing some strength.

- Yeah, it was Cash App that was at 51%. Square gross profit as well, was up 29% in the quarter here. And I think this continues to show as well, even going into this holiday quarter too, where they're going to be-- there's going to be a lot of focus on BNPL, Buy Now, Pay Later as well. That platform also contributed about $210 million of revenue, $150 million of gross profits. So highly profitable segment there, in buy now, pay later. And that was really triggered by the acquisition of Afterpay.

So with the focus of Square Cash App and Afterpay, going into this holiday season, it's largely a question of the merchants that use all these platforms and the consumers that are deciding in one mechanism or another to say, hey, yeah, I'll pay my friend for something that they might be fronting me some money for. Or I'll use Afterpay to pay for things in installments. Or for the small businesses out there hoping that they get a boost on Small Business Saturday.

I think that all still funnels back to some of the strategic acquisitions that Square has made over the years. Excuse me. Block.

- Block.

- Block, Square. Square, Block, whatever--

- It's all the same thing. I'm locking in on PayPal here. You know, when I was reading the earnings report, when I see Apple mentioned-- a new partnership with Apple mentioned at the top of the earnings release, my first thought was this earnings report, it's not going to end well. There's going to be some type of red flag on this report. And there were. The guidance for the current quarter, not good. That's why you're seeing PayPal shares hit about 3% in the premarket, one of the top-trading tickers on our site.

And they talked about PayPal on the earnings call. They have seen a pullback in consumer-- by consumers in discretionary spending, by lower in middle income consumers, noting that the holiday season has not started early. So a big red flag, not just for PayPal, I would argue for a lot of retailers more broadly.

- On the flip side, PayPal is cutting expenses pretty aggressively. And expenses in the quarter actually were better than estimated, a little bit lower than estimated. Its goal is to cut by $900 million this year and $1.3 billion next year. So, you know, to your point, earlier when we were talking about Twitter, you can't cut your way to growth, but PayPal is still growing. It's just going to be growing at a slower pace while it is suffering from all these macroeconomic headwinds.

And speaking of cutting to try to turn things around, Coinbase that's what it's doing. That's another fintech that we are watching here this morning. And analysts seem to be positive about the company's expense cutting even after its revenue was down by 55% last quarter and came in below estimates.