PayPal vs. StoneCo: Which Fintech Stock Offers Greater Upside Now?

The fintech industry remains highly competitive, with global leaders and regional challengers competing for market share. Two names that continue to stand out are PayPal PYPL and StoneCo STNE. 

PayPal, with more than 400 million active accounts, is evolving into a broad commerce ecosystem that extends beyond payments. In contrast, StoneCo is doubling down on serving micro, small, and medium-sized businesses in Brazil and Latin America, tapping into significant growth opportunities. 

Both companies reported strong second-quarter 2025 results, highlighting strategic progress. For investors, the decision centers on PayPal’s global reach and innovation compared to StoneCo’s focused growth in emerging markets.

The Case for PayPal

PayPal is executing on four strategic growth pillars: winning checkout, scaling omni, and growing Venmo, driving PSP profitability and scaling its next-gen growth vectors. Venmo’s momentum is building, with second-quarter revenues climbing more than 20%, and total payment volume (TPV) advancing 12% — accelerating quarter over quarter to the highest growth rate in three years. Debit card usage grew strongly, with Venmo debit card monthly active accounts up 40%, while “Pay with Venmo” TPV leapt more than 45%. Together, these trends highlight Venmo’s transformation from a peer-to-peer app into a broader commerce engine. 

Branded checkout continues to be a key growth engine, with new checkout integrations scaling quickly. In the United States, more than 60% of branded volume now flows through PayPal’s enhanced platform, while launches in Germany and the U.K. are broadening its reach. Meanwhile, BNPL sustained strong momentum in the second quarter, with volume rising more than 20%, and monthly active accounts climbing 18%.

In parallel, PayPal announced the launch of PayPal World, a global wallet partnership with major players like UPI, Mercado Pago and Tenpay Global, unlocking access to more than 2 billion additional consumers. 

Complementing this, PayPal is building next-gen growth drivers in agentic AI, advertising, and its stablecoin PYUSD, which are aimed at creating new revenue streams. With strong engagement, a large active user base and bold innovation bets, PayPal remains a formidable global fintech player.

That said, PayPal still faces challenges. While TPV rose 6%, payment transactions fell 5%. Engagement per user also slipped slightly, with payment transactions per active account on a trailing 12-month basis declining 4% year over year.

The Case for StoneCo

StoneCo delivered a strong second quarter in 2025 despite macroeconomic headwinds in Brazil, reporting adjusted net income growth of 27% year over year and achieving a consolidated ROE of 22%. The company is actively reshaping its business, divesting non-core software assets such as Linx to sharpen its focus on financial services. This allows StoneCo to target more than 90% of its total addressable market — payments, banking and credit — estimated at BRL 100 billion in revenue opportunity. Crucially, its share in this vast market remains small, underscoring significant growth potential.

The MSMB payments segment continues to expand, with its active client base rising 17% year over year to 4.5 million, of which 38% are heavy users of three or more solutions. MSMB total payment volume grew 12%, fueled by rapid adoption of PIX QR Code transactions (+59%) and steady growth in card payments. 

Beyond payments, StoneCo is building a broader financial ecosystem. Banking active clients grew 23% to 3.3 million, with client deposits up 36% year over year. Its credit portfolio surged 25% sequentially, supported by a 41% increase in merchant working capital disbursements while maintaining healthy non-performing loan ratios.

StoneCo’s discipline in repricing, cost of funding via deposits, and conservative credit provisioning highlight a strategy built for both growth and resilience. The company’s ability to deliver 30% ROE in financial services shows it is already operating at best-in-class profitability levels. With a focused model, strong execution and an underpenetrated market, StoneCo offers a compelling growth trajectory that stands out even among global fintech peers.

How Do Zacks Estimates Compare for PYPL & STNE?

The Zacks Consensus Estimate for PayPal’s 2025 sales and EPS implies a year-over-year increase of 3.97% and 12.47%, respectively. EPS estimates have been trending northward over the past month.

Meanwhile, the consensus estimate for StoneCo’s 2025 sales calls for a year-over-year rise of 7.56%, while that for EPS suggests a 14.07% jump year over year. EPS estimates have also been trending northward over the past week.

Valuation: PYPL vs. STNE

From a valuation perspective, we note that PayPal shares are trading cheap, as suggested by the Value Score of A. Meanwhile, StoneCo shares currently have a Value Score of B. 

In terms of forward 12-month P/E, PYPL stock is trading at 11.99X, below its one-year median, while StoneCo is currently trading at 10.93X, which is ahead of its one-year median.

Price Performance: PYPL vs. STNE

Over the past three months, shares of STNE have outperformed PYPL and the S&P 500 composite.

Conclusion: StoneCo Has the Edge Right Now

PayPal and StoneCo are both executing strategies that strengthen their long-term prospects. PayPal leverages its global scale, diverse offerings, and innovation in AI, BNPL and digital wallets, appealing to investors seeking steady exposure to the worldwide digital commerce. Meanwhile, StoneCo is capitalizing on Brazil’s expansive MSMB segment, building a robust financial ecosystem and demonstrating strong return potential. 

While PayPal offers stability and sustained growth, StoneCo’s focused approach and favorable positioning in an underpenetrated market suggest greater upside in the near to medium term. For growth-oriented investors, StoneCo stands out as the more compelling buy today.

Currently, STNE sports a Zacks Rank #1 (Strong Buy), while PYPL has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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