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Investing in Fintechs: Square, PayPal, and Adyen | The Motley Fool

When it comes to payment processing fintech companies, Square (NYSE:SQ), PayPal Holdings (NASDAQ:PYPL), and Adyen (OTC:ADYE.Y) are in a class by themselves. In this Fool Live video clip, recorded on Aug. 23, Fool.com contributors Matt Frankel, CFP, and Brian Withers discuss the major differences between the three, as well as a viewer’s question on how much they should invest in one of them. 

Brian Withers: I’m going to take Prakash’s question first, I would like to put 25% of my portfolio in Square and hold it for five years. Do you think this is a risky allocation?” That depends, and we can’t give personal advice. But let me talk a little bit about how I think of investing in a company. If right now, if 25% of your portfolio and you only have five to 10 stocks, that might not be a big piece. If you’re continuing to work and continuing to put money into the market every month, that 25% is going to get diluted over time. I absolutely love your hold-for-five-years perspective and I think Square is going to do well over the next five years. Just really think about your allocation and in what you want to do there and make sure you’re diversified.

Matt Frankel: We have time for one more?

Withers: Yeah.

Frankel: OK. I will answer the one from Brand New Fool that says how does Adyen compare to Square and Afterpay. Adyen is based in the Netherlands. They are really a truly omnichannel player. When I think PayPal, I think mostly online. I mentioned I bet they have a 95% card-not-present rate. When I think of Square, I think mostly in-person. Adyen does both. They have been very successful more so than Square and PayPal at larger merchants. I believe Uber is an Adyen client. Microsoft uses Adyen for payment processing. A lot of the big, big companies in the world do. They were the ones who replaced PayPal at eBay, if you remember the big news story a year ago where PayPal dropped eBay as their preferred payment processor. Adyen specializes in big merchants. They are a truly international company. They operate throughout most of the world. North America is I think a quarter or their revenue, which is a big, big thing. It’s an interesting market. It’s a different kind of focus. It’s omnichannel, large merchants, whereas PayPal and Square are both more specialized, I would say.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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