Editor’s Note: This is the transcript version of the show we recorded on Wednesday. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to watch the show embedded above, listen to it below or on the go via Spotify or Sounder.
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– Welcome everyone back to Stock Market Live. I am going to turn down the music a little bit. Although the dance, the vibes Oh! it’s a great day, always [immaculate] on a Wednesday Right man. Wednesday afternoon, we’ve got Alfonso, we’ve got Ned and we’ve got Craig and we’ve got [Music]. I don’t know about you, but I’ve been seeing people interact with me on social media, LinkedIn. They have been emailing us in the Show, stockmarketlive@seekingalpha.com. We’ve seen everything. We’ve been interacting with you as well. I mean I’ve seen my LinkedIn blow up recently. I love seeing all of you guys there. Obviously shoot me a message. Tell me what you like about the show. Tell me what you don’t like about the show. That’s what we’re here for.
But in the meantime, the market is open. We all know that I love that little [ding ding ding ding] Right. And the market swings have been huge right now, right. I’ve been watching the Volatility Index. I don’t know about yourself. I’ve been watching the Volatility Index, and it remains above 30, and it’s pretty intriguing to me. So obviously we’ve been seeing these gigantic swings, and I am glad. So, as most of you probably know by now.
Today, in this episode, we’re not joined by a guest. We’re taking a little bit of extra time, and we’re going to dive into not only one company but two companies, their competitors, their brand names. They are recognized all over the world. PayPal (NASDAQ:PYPL) versus Block (NYSE:SQ) aka Square. This — what is with companies all changing their name? Going from Facebook to Meta (META), Square to Block.
What is this trend? I kind of understand the Square to Block name change there, because like if you think about it, I would argue that, and we’ll get into the data here, but Square only has about 1.5 to 2 million merchants that are using Square readers. You know they’re doing [$48 billion] a year on gross processing value through that. But they have 40 million people who are on the Cash App, right? So, it’s kind of weird to just completely call yourself one entity of Square when this other business segment has tens of millions of people, customers that are using it. So, I understand Square’s pivot data Block. I think the name Block is kind of kind of corny. That’s just me. So, the whole Meta change, though, that — that — that — that one caught me off guard.
For sure. Well, first things I want to go ahead and do for everybody here joining us today. Obviously, as I always say, we’re so glad that you’re here. We’re going to go ahead and jump into the market. Get a quick look on what’s going on recently like I said, the VIX is still over 30, pretty intriguing level. Just to be node full of, I mean obviously the volatility is not stopping anytime soon. We still do have gap beneath the market. Personally, this is not investing advice. Personally, I think we could see a little bit of a rally through the end of the year potentially maybe just December maybe not November, just December, which obviously would see the VIX pull back since they’re inverse correlated to the S&P 500, but that’s just based purely off earnings season.
And obviously the big thing to watch this earning season, I don’t know if you’ve been listening, and I know I have already is listening to every management come out saying that currency headwinds are the issue. So, we all know that’s going on. It’s just how a company is hedged, and how are they controlling that instance right now. Looking at the S&P 500, the SPY ETF. This is seeing a breakthrough. I am again going through that line for you. So, we saw the huge pull down, massive move here at
— I don’t know pretty strong bottom, short squeeze, short covering. We’ll see, and then we broke through the 618 Fibonacci level here, and we came back to retest, and it’s held so far. So, if earnings seasons continues to surprise; I think we could see a rally. I mean a lot of people have come out seeing the 3800, the 3900 level for the S&P 500 futures. Everybody’s thinking that we could see a little bear market rally to that level. So, this would line up to about exactly as well to the 127.2 Fibonacci level here This is right under 390. So, something to keep an eye on for SPY. QQQ, tech sector obviously is
— I mean, I tried to fill the gap completely, just couldn’t make it happen. Obviously, we remember interest rates affect the tech sector pretty largely. So, it’s back underneath that 618 Fibonacci level for itself. And then, of course, the Russell IWM. We saw this huge gap underneath from the gap and go of November 2020. I always keeping an eye on that level. But it has been holding this minor trendline down here, which is pretty intriguing. It has a gap above the market as well, right here. I think what’s cool, too, about the Russell there, Daniel is you know, back to your point about these currency headwinds right, you know we had Netflix say it was a $400 million headwind for them. All these companies are going to be talking about these currency headwinds. And maybe I am wrong here to think this but doesn’t the Russell, I would imagine a lot of the companies inside of this index are very domestic.
They don’t have, you know they don’t have to worry about these different currencies. They’re not selling internationally. It’s all domestic revenue. And so that’s what I’m keeping my eye on, is, how will this index begin to move? Is these earnings might look a little bit different than the S&P 500 or even the NASDAQs? Yeah, that’s a good point. I mean yes and no, right. So let me just move this little zoom thing out of the way. I want to show you guys here. I think it’s under analysed here. Uh, maybe they don’t have it. Usually, they have a breakdown of the ETFs. So, I don’t see it for IWM. But that’s a good point.
But I mean the thing is is like, if you’re a smaller company. Yeah, you might be focused on just trying to grab domestic revenue share, or especially right now, they should be if management is smart. Not exactly the time to try to breach international if you haven’t already in the last few years. So that’s a really good point actually, so –
-but it is interesting to see, you know watch dollar right, King Dollar, and how it’s been continuing to increase in value. Something to keep an eye on. Now, before we move on to our next segment. I want to go ahead and take a quick recap actually of some of the companies we already talked about on prior episodes here.
So, the first one I am pulling up is Meta, because we’re getting into earnings season, right? So actually, I am going to go ahead and pull up — move the zoom stuff out of the way I might go and load this little moving average set I have here for everybody. Obviously, the moving averages are still on a significant down trendline, the 20, the 50, the 100. We have got a gap above the market here. Meta, it’s going to be an interesting one, right? They announced the headset. We talked about that.
The big thing for them is, they need ad revenue. So, they got to figure out how they can charge more for their targeted ads and across all their apps as you are talking about. Then we have, you know, GE. That’s like a GE Next. It filled the gap here everyone, it saw a little resistance here at the top of the gap, but then we exploded higher. Why is that? Probably because it’s close to a beta correlation of one with the overall market. So, it moves where the market is, but it is consolidating here between the 50 and the 100 moving average. So, keep an eye on that.
And then Disney (DIS) as well. I think this one’s exciting. I wanted to highlight this one. We finally filled the gap right. I pointed out this gap so long ago, I said, 80 percent of the time gap fills They don’t always fill, right. 80% of the time they do though, and we saw a nice reaction to the upside, another company that I am going to be watching for earnings season, and I think that wraps up that. So, shall we move on? Yeah, I mean, just thinking, though, about this bear market rally that you’re talking about, all these people are thinking about 3800-3900.
I think it’s certainly a play, but I just want to obviously get your feedback on this, but share my perspective that it’s really important to remember, like you know, this is a dead cat bounce, right? This is a bear market rally, right, I don’t think we are at the bottom. I don’t think the economy has turned yet. Microsoft (MSFT), just yesterday was laying off 1,000 people. This is still that bear market rally. We’re not over here saying, alright bottoms in, let’s go, you know, maybe if you’re thinking inverse Cramer perspective, maybe right, because … But from that perspective, you know, this is still a bear market rally in my opinion, and I think what, you’ve got some tailwinds with earnings. But I am over here, I am not
— I am not loading the boat just yet. So being patient, still sitting on my hands, something that we’ve been talking about for the last couple of weeks. yeah, No dude. I am completely in that group. Right. Capital preservation is what I want in a market like this, and I think until I watch the treasury market, the bonds, and everything until that market stabilizes, I am not sure we can get a significant tradable bottom or investable bottom, right, because the bond market is huge. You’ve got to remember that. Yields are looking super incitive. The two-year treasury no oxygen — uh auction, not oxygen, is on Tuesday next week. And it’s something that I am actively considering taking money from what I would probably invest to in the market and putting it, it is two-years, right. It’s two years. You get your interest rate payment every six months. It comes into your account and you get your principal back at the end of the two years. So, I mean it’s considerable. It’s going back to you.
Okay, well, maybe I will go back to a 60/40 portfolio in the future if it makes sense. But for right now, you just got to you know, maybe earnings, and maybe the midterm election is what’s going to help us see a little dead cat bounce, bear market rally, whatever you want to call it. But there’s still so much happening out there that just causes uncertainty, especially Russia, Ukraine, and this interest rate continues to hike. And where is inflation going to land? I mean, there’s still so much happening until things start to settle down a little bit. Is it the right time to invest?
Maybe in good companies that you know have paid dividends, that are well established, with good management, have pricing power, kind of like the basic checklist of value investing, right? And so that’s something that we want to keep in mind as well. Everybody that’s joining right now. Got to ask you. I mean, You know it’s earnings season. We know it’s earnings season. You guys own stocks. We own stocks. What earnings are you waiting to see over the next few weeks, next month or two? Let us know in the chat. I want to get some interest of some stock ideas.
Obviously, we’re looking at PayPal and Square, and I am going to tell you what those are later. John says, he’s waiting to see AT&T (T). Dan, what are yours? I am over here. I am laser-focused right now on cybersecurity and Google (GOOG) (GOOGL). I think Google right now is trading at a massive discount to their historical averages. I am sure you’re familiar with FAST Graphs. Right? So, they’re FAST Graphs, free cash flow per share as it relates to the historical, and where they are today. They’re trading at generally speaking, the same range that they were in 2008, which was a very fast kind of blip there. I am excited to hear what Google’s got to say.
Is this discount justified? Should they be trading at this level or perhaps, are things just going great. And we have nothing to worry about. I don’t know. I am eager to see Google for sure. AT&T, 3M (MMM), GLW. What is GLW? Am I out of the loop here? You are. What is GLW? I can’t think of it top of the head. I am going to pull it up on Seeking Alpha. GLW, all right coming, yeah. Corning. Sorry. Corning Incorporated. Interesting. What to look into that one? It is an IT tech company. Electronic components. Yeah. Definitely one to — Oh, to appease my interest. All right. Well, let’s go ahead and keep things moving on and let’s get on to our next segment, the segment we like to play, of course it is initial thoughts, bullish or bearish.
Austin, do you want to start, or you want me to start? Let’s go. I will start. I am going to start with something that I think that you didn’t read and it’s actually going to be an initial thought. I don’t think you saw this online anywhere, and I think this is going to be a first real thing. So, AI, artificial intelligence can now create arts. I’ve seen ads on TikTok by Mr. Beast and Charli D’amelio for these AI apps where you type in flying elephant with a bean Ball – you know a beanbag on its head, and AI will create some artwork for that. They’re able to monetize. Kids are playing with this stuff. It’s a whole new thing. What are your thoughts on this? And beyond that what do you think about GPT-3 and how that’s kind of going with like the Paragraph and the writing versus the artwork?
I mean, is AI really just blowing our minds right now. And does our youth really going to play around with AI in a way that’s impactful to their day to day? My favorite thing about AI, which I am extremely bullish on overall. I think AI is going to continue this next business cycle higher, right? When we talk about, how do we increase productivity, be more efficient, Reduce costs, AI is the answer to that if we can figure it out. And of course you’re always hearing. AI, machine learning, like what is that? Oh, Algorithm is teaching algorithms. Well, where does that stop and how do we control that? That’s a topic for another time.
But overall — so you’re talking about DAIL-E, too, right? So, I actually — I being a creator myself, I requested access. I got access, and we were playing with it over here at Seeking Alpha. Me and some people on the marketing team, and it’s just like, what can we create with the art? And let me tell you, it’s not there yet. It is completely not there. There are certain scenarios where it does work out, but once if you’re too broad in the sense of what you’re trying to communicate to this AI engine to create for you, it just doesn’t understand. So, there is still a long way to go. I think AI, I am bullish on AI in the long-term.
I think copy generation, I think when it comes to translating languages, when it comes to art, art is in the eye of the beholder, right, in the eye of the creator if you really break it down, right? So when it comes to creating something or storytelling, there’s certain aspects that can be duplicated based off of a format which is really all you’re doing. As you’re saying, hey, this is how my brain thinks, while I am creating. And for instance a few years back, I would have to look it up and send it to you. But there was a movie trailer created by AI, and it was actually pretty good. It was for a Sci-fi movie, and they took the entire film.
They plug it through an AI. It did all the cuts of the scenes, it replicated as your typical Sci-fi trailer, and it was brilliant. But can that be used for commercials? Can that be used for ads on social media, when you want raw and authentic and this new thing that everybody wants to just see the real you and really break it down and don’t hide behind the curtain. I don’t know if they can replicate that. So bullish long term, but it’s not there yet. Got it. I think, to me, you know I think, about the company Paragraphia or CopyAI. These are companies that take the GPT-3 technology and are able to help you with your blog post as a content creator, or perhaps you know, sending an email, or maybe it is like anything to create written content. They are doing that right.
And I just saw a tweet by the CEO of CopyAI, I think, it was last week, that his company just hit 10 million in annual recurring revenue. So, people are serious. They’re using it. It seems like he’s got customers. It seems like people are wanting to, you know, leverage artificial intelligence for their specific day to day, their unique circumstances. But to the point of artwork, to your point, you know art is the, you know, it is in the eye of the beholder, right? It’s one thing to write out some cool stuff and have that be very useful. It’s something to say, hey, look at this picture. So, I am kind of with you man. So next question.
Let me — wait, let me ask you, have you tried it? I have not tried it. You’ve had your stuff stacked here on Seeking Alpha. You’re writing stuff, you are researching, you haven’t tried it yet? It’s all from the dome. It’s all from the dome. All right. So next one I got for you, and this is kind of back to what we’re talking about earlier with earnings that are coming up. I read on The Wall Street Journal that chief information officers say that cybersecurity will once again be their biggest top priority for 2023.
So, Daniel, does this surprise you? Is this expected? Are you in the same boat? Do you think cybersecurity needs to be bigger. Is it that maybe not talked about enough? What are your thoughts on this? I think it is a no-brainer. I think it is bullish, but then I also talked to companies like Microsoft, right.
That the CIOs are consolidating the amount of vendors they’re using specifically for this reason, right? If you have all these different users, and they all have to share information in order for your platform to exist, or whatever it is. There’s so many more holes in the system where something can go wrong. So for some, a company like Microsoft, that has Teams and 365, And everything else in the international presence, and you can run your entire business around the world.
Oh, by the way, they’re the ones that built Microsoft Windows, and they have the security at the backend like I think it’s going to be a continuing trend. But how many external vendors will be able to compete with the likes of an internal of Microsoft, I mean obviously we know Apple security is really tight from the get-go, and they control everything. But from like PC standpoint, and operating the company, I think bullish on overall cybersecurity. I am right there with you.
That’s what’s kind of frustrating, though. So from the investor perspective, and maybe want to get some feedback from the audience here, you know, from the investor perspective, there’s ETFs something like a hacker or cyber or something like that. But a lot of these ETFs have underperformed the market despite some of the kind of shining stars inside the cybersecurity industry, you know, namely, Palo Alto Networks. You know, companies of that nature that have been around for a long time have outperformed the markets. So as someone who wants exposure to cybersecurity, do you have any thoughts on, perhaps like how to get broad exposure beyond just single stock picking or are we stuck in with these ETFs?
ETFs are hard though, because it groups all of these stocks together, and they’re not all going to win, right? You’re going to have different cybersecurity like each company has a different offer of the different service, right? Whether you’re talking about Cloudflare (NET), CrowdStrike (CRWD), Palo Alto (PANW), like, it is kind of like, do you want your cybersecurity to be from the moment somebody even comes to your page, or from the moment they log in, or immediately checked every few seconds after.
Like they all have different mindsets of their product. And so, it really comes down to which one’s the best. And where do we start and stop the cybersecurity wall for these specific companies? I don’t know. I think you would want to look at individual stocks in this scenario personally. Right there with you, and maybe and hopefully the audience agree here one day, but SentinelOne (S) Tanium (TANM) cybersecurity company, AI powered, it is all this, All this fun stuff. We’ll do a little pitch on it one day. The last segment, a question here for you Daniel for the segment from my side of things. And this one is personally, really exciting to me, because I am very intimately familiar with this.
But I want to get your perspective. So, we saw UnitedHealth Group (UNH) share a big bump in the growth of total people served this last quarter. And this was driven higher specifically by Seniors right? We see Medicare Advantage coming in at now 48% of all Medicare participants. Ten years ago, this was 27%, 28%. I also just saw that hearing aids are now going to be sold over the counter. Are people sleeping on the idea of the secular growth trend of the senior citizen. I don’t think enough people are talking about it. You know you have home healthcare. You’ve got Medicare Advantage to think about. You’ve got community and senior-based living facilities. I think There are a lot of things that are kind of investable around this idea of senior citizen that I don’t hear about in the circles that I run, because it’s not tech and high sexy growth, right? Boomers. John says boomers.
Daniel, what do you think? Have you heard about this? Got your eyes on anything specifically? Hey, look, let’s start off with this. We all love boomers. Why Boomers, birth our generation, millennials. If you’re a millennial, you’re birth by a boomer. Let us thank you boomers. And also, they do a lot for our economy, right, like they may have been the last generation that didn’t start with computers at a young age and they had a hard learning curve and everything else going on, and maybe that’s going to hinder them as they continue to get older.
Overall healthcare, bullish across the board. And I wouldn’t say for every company. Right? You’re talking about United Health. I think that company is so set up for success here into the future. I mean, I am thinking about like we’re talking about — people are living longer.
People have more wealth than they’ve ever had, right. You hear about the people that buy homes in the seventies and eighties. And I mean they build wealth throughout their life. Now granted, there are a lot of people that don’t have that. I recognize that, too. They have social security still. They’re going to be the generation that has social security. Our generation? Probably not. I am not planning on it. Medicaid, Medicare. All that stuff is there, and I am like the technology advancements as well is going to set them up for — I don’t know maybe they even live any longer, right. We all have Apple watches now. We’re all monitoring our health. We’re, you know, I think, becoming more health conscious as a society that we haven’t always been, right. We grew up on McDonald’s, and not knowing, originally what cigarettes would do to you or anything right.
So, I think we’ve become more health conscious. I think the overall healthcare sector. There’s a lot to be bullish on there in regards to paying in premiums and the advancement of health, and what you’re talking about like getting things over the counter. Yeah, I am bullish on healthcare overall. I don’t think we’re sleeping on it. I think there’s I mean, there’s the shift of the population and everything happening.
But I think we’re in a good spot. I would agree with that, and I think what really gets me excited is kind of this transition away from fee for service, which is, you get sick, you go to the doctor, and the Doctor is then paid to treat a sick patient to, you know, away from fee for service toward value-based healthcare, right? Which is, how do we pay and compensate doctors and incentivize them to keep people healthy versus pay them when it’s too late when we’re already sick, like that is more expensive for the entire healthcare system.
And so if it’s, you know, value-based healthcare with ACOs, and in either home healthcare, or perhaps hospice, or personal care things of that nature for these older individuals or if it’s more community-based programs, where if it — that could be transportation, that could be grocery delivery, there is just tons of different ways that healthcare — even from a low-tech side, can still be innovated for these folks who might not want to wear the wristbands, have the hearing aid.
You know what I am saying, and a very just like straight, direct clear value ads for their lives, that will save the healthcare system a lot of money, and can save these companies a lot of money as well. And before you chime in here, I want to share this statistic, I remember when I worked back in healthcare, the — we’re talking about PayPal right.
PayPal’s gross profit margin is around 48%, 50%. The gross profit margins on home health and hospice care is low 40s right. So it’s like it is not a sexy tech business by any means, but they’re still making money, which is very, very, very interesting and very investable. I want to flip the script on you real quick. So going off of this healthcare thing, I’ve been reading a lot about Teladoc. I’ve been doing a lot of research on the Mark Cuban Pharmaceutical Company that he’s trying to start down in Texas to like automate pills being made in factories and help save that sort of scenario. As well as you know Amazon trying to do their thing with pharmacy. What do you think about all that? Is that going to continue to drive the innovation in that sector, increase gross profit margin?
I mean is that — have you considered that into the equation? So, I think that in this again, so I worked MedISys, nation’s largest home, health, hospice and personal care company. I understand that the senior market very intimately, and our average person was seventy-nine years old. They were on 13 medications, and they go to the hospital once every two months on average right? I think that that demographic is one in four people in America, maybe one in five, but it’s about 20% to 25% of Americans is that demographic.
And the demographic that Mark Cuban, Amazon, and Teladoc are building for is the other 75%, right? Those are the people who are our age, in their 30s, 40s, 20s, who understand technology, who are open to having a conversation with a doctor on our phone or going having our prescription drugs delivered to our house and things of that nature, right? These people over here. They’re not doing that. They have no intentions of doing that, but they still need care. So, it’s like, how can we not just provide them value, but do it in a way that’s responsible, and can take kind of the burden of expensive healthcare off this. You know, already overspent Medicare kind of budget that we have here in the United States.
I would say we can’t group everybody together though. So for instance my neighbour here he’s an older gentleman, eighty-two years old. He was born and raised in Greece, came to America, lived in New York, at the age of eighteen, built an entire real estate portfolio here, like the American dream, right? He is the guy of the American dream, and I love talking to him about it. And the other day we had him over for dinner, and he was like, oh, check this out. He pulled out his iPhone, and he’s like, here it is. And he showed me the app that controlled his hearing aid and the hearing aid charges on his little wireless charging pad, and he gets to control it by his phone. So, I wouldn’t say that they’re completely clueless when it comes to technology and what’s happening. And I think that is the advantage that you’re talking about that’s coming down the line.
Anyways, I want to move on. Let’s get into your initial thoughts for bullish or bearish. So let’s start with this. The XLE is up 47% year-to-date. That’s current, I pulled that this morning. Are you bullish or bearish on the oil sector from here? I am. I am going to say, I am unfortunately I am bullish. But I don’t think it’s for the right reasons, right? Bullish meaning, oil is going to go up. Yes. I think oil is going to continue to go up. I think we just saw in the Wall Street Journal too yesterday that Biden’s going to continue to drain the strategic reserves right. He was talking about I think it’s another 70 million or 100 million barrels or something going into the midterm elections. I think that there’s a lot that’s happening to try and stabilize.
But unfortunately, I don’t think we’re in a position over the next six, nine, twelve months where oil is going to maintain or go lower. Right. We saw what happened with OPEC. We saw what’s going on now with the — obviously the strategic reserves. I think the price of oil is going to continue to go up. Therefore, the profits of these companies will continue to expand. All right, I do want to point out Alex over on YouTube says, definitely, the seniors are profit potential. Agree with you, Alex. Thanks doing it and hanging out with us. All right.
Moving on, so Bank of America put out their October Fund manager survey, and of the 371 money managers surveyed, who have $1.1 trillion under management. their average cash allocation has reached 6.3%, which is the highest since April of 2001, and they also state that investors are three standard deviations underweight stocks, which is huge. Right? So that’s a big move. Are you bullish or bearish on so many of these smart money managers holding the highest amount of cash since the dotcom bubble? I have not heard that. That is very interesting to me.
I want to — I want to learn more about that whenever we hop off here. That is so, so interesting. Wow, Okay. So, you’re saying, of these 300 plus money managers, that they’ve, you know, sitting on a trillion dollars, and of that trillion it’s invested across all these different equities and assets. But they have the highest cash position since 2001. That is interesting. So, from my perspective, I am not the person to try and bet against the smart money. Again, I am just a 26 year old, trying to figure it out as he goes. I feel like the guy who’s 59, who has probably lived through the last 9 of these and understands this, and you know he gets it. I think he’s sitting on cash for a reason right? But I’d also argue to your point. You know we’re under the standard deviations, underwritten money in the stock market.
So it’s like the moment the light switch flips toward, oh, the bottoms and let’s go. I feel like we’re going to take off like a rocket. So, I don’t know what. Wow! That’s interesting. I just pulled it up. Here’s the article right here. It’s written by Kim Khan, here at Seeking Alpha, breaking it down. They screen capitulation. So they’re saying that capitulation has happened in the market, which is why I find this so intriguing. Because people are saying, well, we might see a bear market rally, and then, you know we’re going to see it, continue to go move to the downside.
I mean our friend Katie Stockton just told me a few weeks ago she’s expecting the market to bottom next year. And I’ve been hearing that from a lot of people as well. But then you get something like the Bank America Fund Manager Survey 6.3% of their $1.1 trillion under management is in cash. See? And I think, Stephanie here has a good point. Right are they holding this cash because of investors withdrawing their money? And they kind of have to hold this cash. I don’t think that’s exactly how fund managers work, but I think it’s an interesting question to ask regardless. So, all right, I got to choose bullish or bearish.
I am — so I guess what I am saying is, I am taking that information of 6% cash, and I am going to say that that is smart, that we are continuing to move sideways or down, and that there we are going to continue to have valuation multiple compression, and the market is going to continue to trade sideways or down over the next call it six to nine months. Final answer. Lock it in. All right. There we go, locked in.
All right, and lastly for you, I’ve got two here. Maybe we should do on both. Doing both. I am here for it. Alright. Let’s start with the first one. Obviously, Netflix (NFLX) earnings, they added over 2 million net new subscribers. Bullish or bearish, on Netflix? I am bullish on Netflix. I am bullish on Netflix. I think that, again like, this is me coming from the perspective of I know the valuation multiples of Netflix off the top of my head. I haven’t even really dove deep into what’s been going on with the recent earnings.
Sure, they just have a $400,000 write off against foreign currencies, like I get that or headwind rather. But I think that Netflix, especially now with the 699-ad supported tier, like this is going to be absolutely revolutionary for their business model. I truly think that if you are a person who is trying to consume content and their library is vast. You’ve got all that I mean they’ve got. What is it? Love is Blind, they’ve got, I mean, I am telling you like every time with my friends, Dahmer, The Mall, Bridgerton [multiple speakers] Yeah. And they’ve got what I mean, saw the Stranger Things, and that just drive a bunch to like, I am telling you, the Netflix originals are crushing it. I really think that that the worst is behind Netflix, and they’re ready to turn the tide. I don’t think it’s going to happen in the next three, six, nine months. That’s not going to happen right. This is going to be a multi-year kind of cycle. But I think Netflix is moving in the right direction for the first time in a very long time. That’s a tiger king take right there. All right. So John over here in the chat says, greatest value for the service provided in my honest opinion, everybody else is tuning in for us. I got to ask you, if you own Netflix, and we go into a recession could you picture yourself actually cancelling your subscription? Would you join the ad tier that they just announced that are coming out with? Let us know. I want to get some get some insights there.
All right, then let’s do this last one. Kanye West aka Ye, or the other way around Ye aka Kanye West. Buy social media Parler, who everyone forgot about, right. He was relevant and then he comes out and buying Parler, as he wants to be Elon Musk, I don’t know, whatever. Bullish or bearish on this man? Holy crap. Okay, I think Kanye, for the last twenty years, fifteen years have — has sort of had his grasp on this community of people that resonate with his lifestyle, that resonate with his upbringing, that resonate with his dreams and aspirations and entrepreneurship like — and he has, I mean, I remember watching a video of him walking through like the streets of Chicago by himself. No security, and he’s like these are my people. I love everyone here, like no one’s going to hurt me. They respect me. They love me, like everything’s cool. But now I feel like he’s messing around with like with the wrong side of — you know what I am saying like you got Candace Owens getting in the mix.
We got Parler coming up over years talking about these very controversial topics. People can only mess with you for so long, Kanye, until it’s like dude, you walked off the deep end Right? So, what does it mean with him buying Parler? I think Kanye has sort of like similar to Andrew Tate was, you know, pushed off of social media for saying some very controversial things. I believe Kanye was also just pushed off of Instagram. Maybe it was Twitter too, but he was kind of given the red flag of kind of stop doing that right. And this is Kanye West saying, hey, I am Kanye West. You can’t do anything about this because I have $4 billion in the bank, and I am going to go buy something where, if you want to listen to me, they can listen to me, right. So I don’t think this is a move. I don’t think this is an investable move is what I am saying. I don’t think this is like big, you know I don’t think this is going to turn into a revolution. Kanye West does this or Kanye West does that? This is Kanye just putting his middle finger up at everyone and saying, screw you guys, I am doing this over here. If you want to listen to what I have to say, hop over. If not, go back to your sorry lives, because I don’t care, because I am Kanye West, and anything I say is gospel right.
But that is I don’t think it’s investable. If I can jump in. I mean, my whole thing is, maybe he made the perfect song for himself, because I believe, and I am like I miss the old Kanye, right, the not always in the news Kanye where just give me another college dropout man. You’re such a great musician or you were, I don’t know. So, coming over here to the chat real quick. We got some responses in regards to the Netflix being cancelled. Stephanie said that she would be cancelling. Eva said, not changing. Where is Danny, I remember getting cut off. He says, I think men won’t cancel, and women will. She is comparing herself to her husband and the two people above. Stephanie says agree to us. I guess. Thanks, Stephanie. Glad you’re here.
All right so before we jump into PayPal vs Block, we’re eating up all the time. We got to get into it. But this is going to tee us up perfectly. So, I was reading like crazy, and I teased it earlier through the post and descriptions and everything. There was a SpaceX Intern, okay, that pencilled some new observations, saying that they believe Elon Musk is the founder of Bitcoin. And so Satoshi Nakamoto, right. I’ve read it over here on beincrypto.com, you guys can search this on Google. Bringing up some new evidence is what this intern calls it.
So, what is this new evidence here. Let me go ahead and jump off here. Josh, if you wouldn’t mind throwing up that first slide, so we can read some of those insight that this SpaceX intern, who obviously was in the wheelhouse, started analysing. So, he said he is close to the source. After working with SpaceX, he said, he connected all the dots. So what are the dots? Well, so there’s this list here that he pulled together, saying, you know, let X equals Satoshi. X must have proficiency in C++ to write the Bitcoin source code. Has to be knowledgeable about money and software. There is an IP address link to Van Nuys, California at one point in 2009. They have to have concern for payments fraud, public domain, graphics going down the list. I mean. You guys can go and read all of this. But the last bullet point is all of the above must be true simultaneously.
And it’s not just stuff about money payments and not believing in our Government and x, y, z. It’s also the way that Satoshi wrote within the white paper of Bitcoin, saying, I forget what the exact words were about like, there it is, right there in the middle. Order of magnitude and bloody. So they use phrases like that. And then this intern went and looked at like all this, you know. Tesla PR documents, earnings calls everything else saying Elon Musk talks like that a lot. Not only that, but the way they write by adding two spaces after a period is something that Elon Musk does as well. So, we’re Really, I was going to ask that Satoshi did in his whitepaper So, we are talking about like this intern is like, I think I realize a lot of correlation here, even though he’s been trying to, you know hide it and say it’s Dogecoin. I remember, Satoshi’s wallet has never been open.
Bitcoin has never come out of there, so is Elon the founder of Bitcoin. Well go to the next slide, Josh. It goes on in this article to talk about PayPal right? What the link here is, Elon Musk originally created X.com. Okay, that was payment process, and we can get into it in a little bit. But then also X.com got acquired by PayPal. He became into the PayPal full, became PayPal’s CEO for six months, until he was kicked out, whatever. So there might be a little disagreement there. But the mission of PayPal was also to create a global currency and create these digital wallets and create a system that lets people just be able to transfer money through these digital wallets. And that’s the same thing, kind of like Bitcoin, right?
It’s just the centralization versus decentralization. So, there’s a lot of weird correlations here, just something to bring up. Obviously, it’s all –it hasn’t been currently confirmed by Elon. I don’t know if he ever will. Maybe he will turn seventy-eighty years old, and he come out and laugh at all of us, who knows? That’d be such an Elon thing to do.
But that tees us up perfectly in today’s topic of PayPal vs Block. So I just wanted to highlight that real quick. Any initial thoughts on that? Do you think that he might be Satoshi? Not going to lie? I did not have Elon Musk becoming Satoshi on my 2022 bingo card. I had a lot of things, but it was not that. So I actually don’t think he is. And I have reason to believe it is someone else. And the person that I believe is Satoshi Nakamoto is Sergey Nazarov, the CEO of Chainlink. He and Vitalik Buterin, right, who created Ethereum have been in this stuff since, I think it’s early 2000s as well. He created the smartcontract.com website the same day that Bitcoin.com was created. There’s tons of like interesting correlations between what he’s done, his education, his background, everything with like that, as well as you know Bitcoin and the white papers, it’s so that is actually my bet, is Sergey Nazarov, the CEO of Chainlink, maybe we talk about that on a future episode. But I just did not think that Elon, might have had it in him. That’s really interesting to me Daniel. Pretty weird, right?
So, let’s go ahead. Josh, let us get to our next slide up, and we need to start diving into this awesome PayPal versus Square or Block, as it is now known. We got to talk man. What’s the deal here? What’s the rundown?
All right, here is the rundown. So here is the deal. We’re going to talk about PayPal for a little bit. We’re going to then talk about Block for a little bit, and we’re going to talk about their financial kind of profile. And then we’re going to talk through reasons why you get excited about PayPal and reasons why you might get excited about Block. At any time, throw in some feedback. So Let is jump into this. So, kicking things off with PayPal right?
I am going to assume everyone understands what PayPal is, uses PayPal, maybe even has a PayPal account. But in case you don’t, you’re just the high level clip note, right. PayPal operates a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. Its platform allows customers to pay and get paid, transfer and withdraw funds to their bank accounts and hold balances in any currency they want. They were spun-off of eBay in July of 2015.
So since the company describes itself as a technology platform that enables digital and mobile payments on behalf of consumers and merchants. I think it’s really important to start with those two cohorts of users and understand kind of how that’s moved along right. So total active accounts on PayPal today is 429 million, which is up 6% from this time last year of 403 million wonderful, with 35 million of those active accounts being merchant accounts. This is up 9% over 32 million active merchant accounts this time last year. Net new accounts this last quarter was about 400,000, which is a massive deceleration compared to the 11.4 million new accounts added this time last year. So, it’s a big deceleration there.
But you know they also say they allow folks to pay and get paid. But how much of this paying and getting paid is actually happening. So they actually report a metric called annual payment transactions per active account, and right now that metrics is coming in at about 48.7 which is great. That’s almost 50 transactions on an annualized basis per account per person. Right? That’s moving money around within PayPal. It is up 12% over, you know year-over-year here.
So — and below I am not sure if Josh knew this in there, but there is a really cool Q2 2022 PayPal metrics slide. and walks through all the quarters, all the metrics there. Maybe we’ll get to that later. Yeah, there we go. And so you can clearly see here we’ve got the active accounts growing from 392 now up to 429 million. Net new 14 million, 11 million, 13 million and then it really slowed down here in 2022 to only 400,000. So that is a quick little snapshot of PayPal. They’re clearly growing, clearly moving in the right direction. And there’s reasons to get excited, so we’ll get into that here a little bit. But before we do that, let’s talk about Block right? So what is Block? Long Story short, is Block through what we talked about a little bit earlier, Daniel was.
They enable businesses, sellers, and individuals to participate in the economy. Square is one of their business segments, and it’s a commerce ecosystem that’s similar to PayPal. Help sellers start, run and grow their businesses. Cash App is an ecosystem of financial products and services that help folks manage their personal finances, right? So, I actually wasn’t able to find the total specifics, or the specifics rather of the total Square users who were the merchants there. But I did some estimates, and I think it’s between 1.5 million and 2 million monthly active users. And I would argue this is probably correct, because over the last quarter there was $48 billion in gross processing volume, that it happened in it, and which means, if you evenly distribute that across all of their merchants, they are doing about 100,000 year.
That’s obviously not the case. If they skew and hire for the 500,000 plus then it is the 100 by — and I am not sure if we added that image or not, the Square GPV mix by seller size. But long story short, yeah, that is on there, Josh, throw up the slide. If we don’t mind so we can see this. So this is what’s interesting about this, right? They’ve got a lot of folks, a lot of sellers, lot of merchants who are making, annualizing gross processing volume of over $0.5 million a year. And so, we’ll talk a little bit more about why, I am kind of worried about what’s going to happen with the recession, how they might impact small businesses, specifically their merchants, and how they’re going to make money. But if this cohort of folks who are doing over $500,000 a year continues to grow, which it clearly has since 2020 and 2021 and 2022 here. You can see it’s gone from $5 billion to $13 billion, to $18 billion.
Then maybe they might — they begin to get more resistant against any recessionary period versus I mean, it’s a very big I guess what we’re trying to say is, if you’re — you have a small business doing a 100,000 a year, right less than 125,000, just the smallest hiccup is going to disrupt your whole business right? So pretty encouraging to see that. So they also shared with us now that was Square. Something about Cash App for a moment. So, they shared with us they have 447 million monthly active Cash App users during this most recent quarter, which is up 18% year-every-year.
It’s about 7 million people. And each of these companies are operating within these, like merchant user type businesses, right? PayPal’s got their merchants; Square, I guess, Block has their merchants. But they’ve got very different growth levers and a very different financial profile, with very different long term objective. So, starting with PayPal here on this side, PayPal is a cash printing machine like that’s straight up, right. The gross profit margins are closing in on fifty percent. Their free cash flow margin is 20%. They’re in an incredibly profitable business. They are having a profit margin of 16%. I mean, cash is all over the place for PayPal.
And to the contrary, Block is a completely different story. Their gross profit margin is around this 33% range depending on the quarter. They have unpredictable free cash flow depending on how much they’re reinvesting back into the business. It should be around $1 billion this year, but I mean it’s kind of a low, you know, a very low kill year. 6% margin and net profit margin is also all over the place. It’s very unpredictable. We have no idea if it’s going to be a good year or a bad year, whatever depending again on these investments.
So, if you’re on the PayPal vote, and you’re like Austin, why would I want to buy stock in PayPal? What should I be excited for? What should I listen to in this November earnings call? Here’s the first thing I want to talk to you about and that’s account activity. So last year PayPal is management team told us that they want to have this bigger emphasis on account activity aka engagement, right, those annual transactions per year. Right now, it is around that 48%. And this has moved up considerably year every year.
Here’s a quote from there. I believe it’s their COO saying, we’re not going to throw marketing dollars at low value customers coming in. We’re shifting our emphasis toward engagement. The vast majority of our volume comes from only 33% of our customers. And you know, this will theoretically allow the company to see a higher take rate, resulting in higher net profits. I’ve also got an interesting graph here that I found from Barclays, that shared when this strategy pivot happened and this sort of increased, like they’ve seen on a monthly active user perspective. I am not sure if you want to throw that up or not. Yeah. Throw it up Josh. That is crazy. That is the strategy.
Hey, we want to go. We want to just completely focus on engagement. And now you’ve got monthly active users going through the roof. Looks like it’s working um. And again. That might also now.. Is that? Hold on? Is that where — is that when Elliot Management took their stake? I don’t know. Is that because that’s the one thing that I am waiting for on this next earning call as well is like, I expect their expenses are probably going to decrease, so activists Elliot snapped up interest in PayPal and okay — no, on July 26 of this year. So I am way off. So they turned before even an active investor came in, that — applaud the management there. Yeah. Yeah. They saw it coming. And to the point of engagement, right, the U.S. Census ecommerce data for July and August. So that kind of like, you know you get that little last part there. It was actually up 14%, showing that there’s a lot more people who are, I guess over the last couple of months were buying online. And this is likely going to reflect nicely inside of PayPal’s earnings.
But looking forward, it’s also important to note that PayPal’s total processing volume is very correlated to this e-commerce data that’s being released by the U.S. census. So, if U.S. census turns south just know that PayPal is also probably turning south, right. PayPal also has a massive focus on controlling costs. You just mentioned that Daniel, right? They’re hoping to control some $900 million and have that materialize in cost savings this year. And the last thing to get excited about is, these — the share repurchase program.
So, we got to spend that cash somehow, right? Free cash flows all over the place. They have $15 billion authorization to repurchase shares. And $4 billion that has happened in just this year in 2022. So that’s PayPal. If you’re excited about it or not? Let’s move on to Block. Growth in innovation is the name of the game here, right? They’re reinvesting all this money back into the business. That means new things need to be happening, new ways to make money, new ways to add to that, maybe free cash flow on an annualized basis.
So this could also, I guess what I am trying to say here is Cash App Borrow is a new product that was launched in 2020. It allows like an instant cash advance that gets paid back depending on how much you use Cash App. This could add between $25 million and $35 million a year to the gross profit, which doesn’t seem a lot right now. But that’s only for the first one million users right. Only one million people are using this Cash App has 44 million people. Right? So how does that begin to compound on itself as Cash App not only grows its user base, but also activates more of these products inside of its own existing user base. So that’s something I am keeping an eye on. Another thing that I am thinking about here is, you know, over the coming years Block is going to continue to link together Square Cash App in this after pay business that they just paid billions of dollars for more intimately, which is going to, I think, going to create something called a Cash App Pay right.
It is similar to Apple (AAPL) Pay, maybe Google Pay, or like what I guess a WeChat and Ali Pay is in Asia. Right. Block is using at Adyem, publicly-traded bank company Adyem. They are using them as their acceptance partner, and expects to integrate Cash App pay functionality in Q1. And in my opinion, I am already thinking, okay, Walmart (WMT) does not use Apple Pay full stop. They do not use Apple Pay. What happens when Cash App is able to strike up a deal with Walmart to use Cash App Pay right, or perhaps maybe Target (TGT). I don’t know about Amazon (AMZN).
I think Amazon’s kind of in bed right now with PayPal. But I mean I am just thinking about these big groceries, people shopping all the time. They are swiping new cards, makes a lot of sense to me. And finally, Affirm is on. Isn’t Affirm the buy now, pay later for Amazon’s platform. They are. Yes. Okay. So they have got PayPal as part of Amazon. So, it’s just different product offerings. Yeah, I think so. I think so. But you know, and I guess a really cool thing, too, is, you know, the management team is also really understanding, and I guess, under — realizes that we could be in a recession.
They’re cutting $250 million in operating expenses this year which would offset. I think it’s you know we’re talking about these sellers, and I think what’s interesting is that we have some sort of recession coming, that’s really going to wipe through the economy, a lot of these sellers that Cash App. I am sorry, Block or Square is taking a cut from — that is going to diminish a lot, right? That’s going to come down considerably. And so, I think they’re seeing that the management team is pre-emptively doing that. Now with this $250 million cut, I mean, they’re going to continue to do that until they see the tide getting turned.
So long story short, it’s a completely different investment. Right on one side you have a company who’s making a lot of money, cash is being printed, that is PayPal. And seems to be moving the company around from an engagement perspective. You got free cash flow that’s growing every year. You’ve got it all these other different cool things around an established company. And on the other side we already have Block, who is just trying to figure it out, right? They’ve got Cash App Borrow; they’ve got round ups.
They’ve got seller this ecosystem that they’re going to go acquire, you know, After Pay for I think at least twenty some billion dollars. They’re doing whatever they can, and they’re just having fun and getting it all done. I don’t think that you’re going to see a correlation at all between their stock prices, I think PayPal is going to be a lot more steady, a lot more predictable, considering the free cash flow, considering the profits that are already in the bank. And with Cash App I think it’s a lot of speculation, right? They’re going to see a lot of volatility. There’s going to be lots of ups, lots of downs, good quarters, bad quarters, hey we experimented with this. It didn’t work, or hey this is actually really cool.
Turns out cash at Borrow is going to be a new big, you know, money maker for us, right? I think they’re very completely different investments, and I think, before anyone begins to consider either of them to know that, to recognize that they’re very different type of investing strategy. One’s very aggressive and speculative, the other one might be considered a little bit more, predictable and safe if any investments ever say probably definitely not. But you know I am getting that. Yeah, no. I mean, you make so many good points here.
I mean, you’re talking about PayPal, who has been the incumbent, if you will, because it was founded back in 1998. Hello! Right before dot com bubble perfect timing, and then you have a company like Block that wasn’t founded until I think it was 2009 right? And you’re talking about Jack Dorsey versus Peter Thiel. And also, can we just take a second and break down the PayPal mafia? Right. like. Oh, my God. The fact that PayPal has produced, I went ahead and compiled a list just to share with everybody. So what is the PayPal mafia? If you haven’t heard of this? It’s a group of former PayPal employees and founders who have since founded and or developed other additional technology companies that we have all grown to love.
You’re talking obviously Elon Musk, but the saga of him getting bought by X.com, became CEO. Six months later he was out, remained on the Board of Directors, didn’t want to sell the company. They sold it anyways to eBay. He got his big cash out. Obviously, we know how that story goes, right. Tesla (TSLA), SpaceX, on and on. Starlink now. You got Peter Thiel, who not only helped the founder of PayPal, but he’s a VC now. He helped find — he found the company Palantir Technologies as a co-founder. He also was the first investor in Facebook, right? Facebook, Stripes, SpaceX, I mean he is — he invests his money, and with Elon to do his companies, right. I mean.
Obviously the founder of PayPal believes in all these other people, and invested in a lot of them. You have Reid Hoffman, who founded LinkedIn, who was also an early investor in Facebook. You have Roelof Botha, I am not sure that is how you say his name. He went on to VC Fund Sequoia Capital, which we all know to become a senior steward. Then you have Russell Simmons, who was an engineer, and Jeremy Stoppelman, who was VP of Technology at the time, who co-founded Yelp. Review site for food. You love it right. Steve Chen, who was an engineer, Jawad Karim, who was is engineer, and Chad Hurley, who was the web designer co-founded YouTube. Like come on man, like everybody came out of this company, and they were just like, Oh, my gosh! Anyway! So can keep on going about PayPal.
Go into some other things. I think what’s going to be interesting for these two stocks like you’re talking about. You made very good points. PayPal is here making a ton of cash. Block is still in super growth mode, in the market environment that we’re in we want profitable companies. And as you’re saying, I don’t think you’re going to see a correlation in these stock prices. Now we’ll get into that in a second, because I pulled it up in a slide at the momentum, and what happened over the last fifty-two weeks with these companies, which looks very correlated.
But right now, I think you’re going to see PayPal if they can continue to deliver that increased cash flow, which I think Elliot management is going to be pushing them on. Then you’re going to see PayPal stock probably at least find a nice little bounce here. Not to say it’s going to be the bottom. There is correlation with the overall market as you’re talking about if we go into a recession, or payment is going to slow down, the whole thing, just something to keep in mind. With Square with Block obviously they need to grow, and if they’re hitting. You know as you mentioned Cash App, they’re going to double down on that.
They have discover tab. If you go back and look at their earnings for the last quarter, and you look at every analyst question, it is pretty much about Cash App. You’re doubling down on this strategy for this product at this platform and the discover tab trying to get people to find products in your site, and then immediately link through your payment service because you collect the feed. Can they pull that off? Think about it? That’s like Amazon 2.0.
I mean that’s, I mean, it is — imagine if Amazon had its own bank, right because cash up to bank essentially. They have a checking and a savings account. I mean it is insane to me, and I think that. And you pair that with Cash App pay. I mean that to me is the Trojan horse that no one’s talking about with Block right now is, how can Cash App with this discover with Cash App pay? And now with Cash App Borrow, like how can they encourage people to that? We’re kind of blocked out of the economy, blocked out of the banking, blocked out of the online purchasing.
And say, hey, you do not have an ability to purchase. We’re going to tell you what to purchase, and we’re going to take a little cut along the way. Well, you are talking about Cash App Borrow for instance. This is nothing new, right? I used to be a business owner. We use QuickBooks from Intuit. And Intuit now and QuickBooks has capital that are lending to businesses. So many other companies are also doing this lending model.
So, my big question for you, I think, actually Austin, on the spot is what — with what Block is doing, and I am sure PayPal will do it as well with their capital arm. Is that going to hurt banks? Should we be worried about the financial system going forward. If all these other companies are trying to lend out loans to businesses? That’s a good question. I am going to say, no. I think they’re lending to different people. I think that Cash App is lending. So, a company I am very, I work very closely with is [indiscernible]? And they have a really cool thing called Insta Cash. It’s two hundred and fifty bucks if you collect or connect your direct deposits to their app. And you’re actually making money, which, as folks would do within Cash App right. It’s a bank. You can say, hey, I don’t get paid until Friday, but I need to go buy groceries. Can I have eighty bucks to go do that?
No problem, like no interest really with Moneyline. I don’t know what it is specifically with Cash App Borrow, but I would imagine that that’s the type of person that Cash App Borrows helping borrow money right? It’s up to 600 I believe, depending on how much in assets you have in their app, and you can say, hey, I need to go buy grocery. I need to go pay my electric bill. I need to do something in a way that’s meaningful to my life very value adding, that’s under call it $200, $300, and that I think is, what’s going to happen. And I think that’s very different than like a business bank loan, or like some sort of like, you know, short lending or things of that nature. Right. Hmm. That’s an interesting point. Badass.
So before — we’re already coming up at the top of the hour, man, where did time go. Josh, I want to run through some of these slides. Obviously, we got to look at the ratings summary from Seeking Alpha on both of these companies, PayPal and Block. Do you mind going ahead and throwing that slide up. We can just run through.
So for PayPal, the Seeking Alpha authors are a hold, Wall Street analysts are a buy, and the Quant system is a hold. For Block, the Seeking Alpha authors are a buy; Wall Street analysts are a buy, and the Quant system is hold. Let us look at the factor grades next slide please. The valuation score for PayPal is a D+, growth is a D+, profitability is an A, momentum is a B+, and revision are a B+. And for Block the valuation is a C, the growth is a D, the profitability is a C, momentum is a D; revisions are a C+.
So obviously, you see the big difference here in profitability like we’ve been talking about both of the growth, for these companies is kind of weak right now. Obviously, Block has seen a big decrease in momentum, and we’re going to look at that in a second. And of course, revisions. Let’s go to the next slide. Let’s just go ahead and keep going. Wall Street analysts. I pull these differently. You can see the breakout of how the Wall Street analysts are looking at each of these companies, right.
So, for PayPal, they pretty much range from hold to strong buy. There is no sell. There is no strong sell recommendations on PayPal as a company. For Block, though you see two analysts say, a strong sell. One analyst says it is a sell, and the rest of these — what is that, 38 analysts that are covering it are between hold and strong buy. Next slide, please. So, I went ahead and pulled the earnings estimates for the next few years for each of these companies. PayPal, you see, 17 times for next year. That’s not bad in my opinion, right. When we talk about PayPal being so profitable, year-over-year growth 13% – – I mean look at that.
And then for earnings estimate on Block, you are talking about 36 times. They definitely though they are growing company right. They’re the newer company like you’re talking about, but they also weren’t they the ones that first started with the payment terminals and everything. I think if they get those in your hands, are you more likely to stay with Square or sorry Block? That’s something that I think about.
Are you willing to switch because I know PayPal? I think it has what’s called Zettle now, their POS system that they’re sending out to people. So, something to keep in track there. And last slide, please. Momentum. I went ahead and pulled these. So, you guys can see why the momentum grades are different. Block has just not been able to catch a bid at all. Obviously, you see there on the fifty-two week range, both of these companies share price within the last fifty-two weeks, or over $270 a share.
Today, PayPal I think is trading around $85, Block is probably around this $51 price as well $52. The fiasco with PayPal, Hart is asking about. Did you cover the current fiasco with PayPal? Which fiasco are you asking about? Because there’s, no, we did not. So yeah, the current fiasco with PayPal around the $2,500 fee. I believe it was. Oh, the misinformation. Yeah, yeah, I have that on my notes here. Actually. So actually, I will read it. PayPal is red mark recently was the news that broke that they would fine people for information — misinformation, and my initial thought is, what are you thinking? What are you thinking? You’re not China. You can’t do that. Sorry if that’s controversial. But like, what are you thinking? You can’t just reach in and take money from people for misinformation. That’s not. The private sector cannot do that. I love that their old President even came out on Twitter (TWTR) against the company. Like, come on, man, you can’t do that.
All right. Let’s see what else we got here. Both of these companies don’t pay a dividend. Earnings for Block or sorry earnings for PayPal are coming up estimated for November 3. They’re looking for EPS of $0.96 a share with revenue of $6.82 billion. Block earnings are on November 3. They’re looking for an EPS of $0.23 a share and revenue of $4.49 billion. So obviously let’s wrap this up by your take. I mean, obviously, if I was to invest in one of these companies right now, this is not personal advice. This is not investment advice. If I was to invest right now, which I have not. I would go in PayPal. Dude, I am so glad that you said that. I am right there with you man. The market we’re in. The market we are in right now, right is a value market. We care about monies that produce cash for shareholders. We’re looking out for ourselves. If there’s a recession on the horizon we want to protect our portfolios and watch ourselves.
Block might have its hay day. Obviously, I don’t want to see. Kathy would invest in it, because then that would worry me. But, you know in the future, if they can survive this moment in time, which I think they will, they have a good base, a solid base. Obviously, they should maybe start looking international later on. They’re just in the growth mode, and I can’t recommend that. I can’t go into that right now. I am right there with you, I think. And what’s interesting about PayPal stock price, and you know it’s got the momentum revision, was kind of high, is because over the last, I mean since June lows it’s up 22%, 21%. It even rallied a 47% rally over a two month period from June to August.
Right like what’s catalysing that. I think PayPal is — I think people are beginning to see the value play that’s around here. And then, I flip over to fast gas for a moment and look at the free cash flow multiple. It’s trading at the lowest ever traded at right eighteen times. It is absurd. So yeah, I am right there with you. I think Did you see my eyes just light up. Penelope, here in the chat, says what was worse than what PayPal tried to do was they’re [engine] is backtracking, and it was huge, and I am deleting PayPal for it.
How many people will delete PayPal from that? Something to think about as well. I mean, look that that’s a big black mark on the company. Obviously. It will be interesting to see what they say about that on the earnings call. Obviously, if they don’t say anything, somebody’s going to bring it up. I guarantee you on that. Denise says, do you think PayPal could be acquired.
Personally, I do think they — I don’t think they will. I don’t think they’ll be acquired. I think they’re a little too large at this moment. And also the other thing, I’ve got to think about for long term, if this is an investment.
Is Apple Pay and Google Pay going to come in and completely destroy this as a company, right. Apple is offering iPhones as payment terminals. They have the back end. Obviously, we saw the news with Goldman Sachs recently about savings accounts. They have the credit card. They can do almost anything they want it. It is just going to be a slow roll out. They’re going to eat everybody’s lunch. Google. The same thing. We’re talking about the phones, these mobile phones are the connection between those companies and taking over everything.
If you buy an iPhone, they’ve got you. If you buy a Pixel, they got you, right. I think it’s the same thing for businesses, for payment terminals and et cetera. So Lindy says, a hundred percent. Thank you, Lindy. Vita says unlikely. Denise, given the high profile people who have been involved with it. They won’t go for it. I think you’ve got a point to beat as well. All right. This is a good episode. I love this. We should do that.
And do you guys want us to do more of this like little competitor action? Let us know in the chat. Let us know in the comments. Obviously send us an email at stockmarketlive@seekingalpha.com. If you have any stocks that you want us to cover. These were both, I believe, submitted to us from Stephanie. Stephanie, we appreciate you. We love you being here. John, as well. Alfonso, Rena, I mean everybody’s here. Jacob, Jaco, Jose — Alright hold on We’ve got everyone say we try to do more of this. Okay. I think we can get a [theme]. Norm, we see you guys, Veto Williams, obviously we love that you guys hang out with us for this hour every Wednesday. And we’ve definitely got to dive back in.
So, any stocks that you can think of I mean, obviously, we can do the ones that everybody knows about, whether you’re talking about, you know Apple versus Microsoft or Meta versus other social networks. But I love this one. I love PayPal and Square. I mean, I am a Venmo user. I don’t know Austin, do you use Cash App. I am a Cash App guy. I don’t use Venmo. I mean, I have it, obviously. But like someone’s like send me money, I am like what’s your Cash App.
Just me. Interesting, all right, Daniel, maybe I am a boomer. What is happening. All right. Thank you, everybody. We only have PayPal in Canada. So, Stephanie, that is interesting. There we go talking about the international market. Love having you guys with us. Everybody have a great rest of the Wednesday.
Like I said, send us stock ideas at stockmarketlive@seekingalpha.com. You can find Austin on social media here as well. I am on LinkedIn all the time posting good content there as well. Come on over, comment, interact, love to talk to you guys. And let’s get some vibes going before we get out of here. Everybody have a great rest of the week.
Earning season is in full effect. Obviously, if you haven’t checked out the screeners on Seeking Alpha, you can do that. Strong sales, top stocks for earnings season. Go check that out. We did a great earnings webinar last week about that. Austin is on Seeking Alpha. If you guys don’t follow in, give him a follow. Give me a follow and let us talk fun stuff. why not follow. This is PayPal vs Block. Everybody appreciate you coming by. Everybody have a great day. Josh, thank you as always.
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