PayPal (PYPL +1.39%) and Amazon (AMZN +2.02%) are two of the biggest names in tech. In November, PayPal announced that the two companies would be launching a partnership in 2022 that would allow customers to check out on Amazon using the Venmo app. PayPal and Amazon both reported mixed third-quarter earnings, and investors have seen shares fall as a result.
However, as long-term investors, it's important to look at the strength of the underlying business involved and not a single quarter of results when assessing a company for your portfolio.
In this segment of Backstage Pass, recorded on Nov. 10, Fool contributors Taylor Carmichael and Rachel Warren discuss PayPal and Amazon's partnership, as well as their general investment theses on both companies.
Taylor Carmichael: Last year, Square announced that they're going to buy Bitcoin and that was big for the Bitcoin. Square has been big for crypto for a while, they've been doing it on their app. But the big change, the big news was when PayPal said we're going to start trading on Venmo, and that just sent the whole crypto market and still going strong. Bitcoin has gone from wherever it was, I think it was $7,000 or $8,000 a coin to now it's like $67,000 a coin. It might have been $9,000 a coin. A lot of that was, PayPal put their reputation, and they're saying this is a legitimate thing.
A lot of companies who might think Square's a little strange, Jack Dorsey's a little strange, they know PayPal is changing the world. When PayPal went on board with crypto, all of a sudden, you see all these institutions start buying crypto, and it has become that much more validated.
To me, they're a huge force for crypto and then that's what happened today, was a crypto crash last quarter, and it's going up this quarter so I expect huge numbers from PayPal now. As for the Amazon deal, that's awesome. I'm own both these stocks, so it's all good for me. But [laughs] we'll see, I guess.
Rachel Warren: No great thoughts, guys, and I agree Connor, with your point, but it seems like the market's been overreacting a lot this earning season. I think it's a combination of investors are a little antsy, understandably so, because of inflation being so high and ongoing supply chain bottlenecks that are even having the power to impact companies like Amazon.
I think it's also some of these companies investors saw these really huge profit margins and revenue jumped at the height of the pandemic and maybe things are slowing a little bit down to normal based on some of that. But overall, I mean, I agree with what you were saying, Taylor as well, look at the business and not just a single quarter. I personally think this is great news for both companies.
I think it's great for Amazon. I think it further diversifies its payment options on its platform, and I think it could potentially bring even more customers into Amazon's stable given the tens of millions of users on Venmo alone. I think it could have a similar impact for PayPal as well. I like both of these stocks. I think as a long-term investor, it's important not to base your stock-buying thesis ever on a single-quarter.
I think both of these are great businesses that have real portfolio staying power. I think if you want to invest in fintech, PayPal is a super smart option to consider. I love Amazon's business model. I'm a share owner myself, I talk it about a lot on this show. I love how diversified the business is, and I think that is one of the reasons Amazon continues to be such an interesting and compelling company to invest in. As the world is changing, we're increasingly entering a world where everything is digital.
Seeing these trends as in the growth of fintech stocks and all these other sectors, crypto, a digital currency, and Amazon has managed to keep up with these trends in these changing times and further diversified business model and enter these new markets with a lot of success.
I think this is great news all around. I thought this was a really interesting story. And I agree, I think PayPal had a decent quarter. Revenue is still expected to grow 18% for the full-year 2021. The company is expecting to end the year with about 430 million active accounts, so I think this is a good company to keep an eye on or perhaps consider if you are not currently a share owner.
