StoneCo vs. PayPal: Which Fintech Stock Has More Upside Potential?

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. StoneCo and PayPal represent two very different bets on the future of digital payments — one a Brazil-focused fintech riding the growth of an emerging market, the other a global payments giant working to reaccelerate growth at scale. Comparing their business models, growth drivers and risks helps clarify which stock may offer greater upside potential from here.The Case for PayPalPayPal 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 third-quarter 2025 revenues climbing more than 20% quarter over quarter and total payment volume (TPV) advancing 14%. Debit card use grew strongly, with Venmo debit card monthly active accounts and “Pay with Venmo” TPV up 40%. Together, these trends highlight Venmo’s transformation from a peer-to-peer app into a broader commerce engine.Branded checkout remains a key growth engine, with new checkout integrations scaling rapidly. 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 third quarter, with both volume and monthly active accounts climbing 20%.PayPal is investing in AI-driven e-commerce through “agentic commerce,” wherein AI agents assist consumers in discovering, comparing and purchasing products. Through partnerships with AI and e-commerce platforms, such as Perplexity, OpenAI and Google Cloud, the company aims to enable more scalable, secure and intelligent shopping experiences for merchants and consumers.PayPal operates its stablecoin, PYUSD, a dollar-backed digital currency built to enable faster, blockchain-based payments and transfers. Additionally, U.S. PayPal customers can use the “Pay with Crypto” option, which allows them to select “Checkout with Crypto” at online checkout. Further, PYPL continues to forge partnerships to expand its offerings and global presence. The company exited the third quarter of 2025 with cash and cash equivalents of $9 billion. It returned $1.5 billion to its shareholders by repurchasing approximately 21 million shares of common stock in the third quarter of 2025.That said, PayPal still faces challenges. While TPV rose 6%, payment transactions fell 5% year over year in the third quarter of 2025. Engagement per user also slipped slightly, with payment transactions per active account on a trailing 12-month basis declining 6% year over year.The Case for STNEStoneCo delivered a strong third quarter in 2025 despite macroeconomic headwinds in Brazil, reporting year-over-year adjusted net income growth of 18% and achieving a consolidated ROE of 24%. 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.StoneCo’s MSMB (micro, small and medium business) payments segment continues to expand, with its active client base climbing 17.6% year over year to 4.7 million by the end of the third quarter of 2025. Around 38% of these merchants now use three or more of the company’s solutions, boosting engagement and profitability. MSMB total payment volume grew 11% in the third quarter of 2025, fueled by rapid adoption of PIX QR Code transactions (more than 49% year over year) and steady growth in card payments.Beyond payments, StoneCo is building a broader financial ecosystem. In the third quarter of 2025, active banking clients rose 22% to 3.5 million, while client deposits jumped 32%. Nearly 84% of these deposits are time-based, providing StoneCo with a stable, low-cost funding source that enhances margin resilience.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 33% ROE in financial services shows that 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 and 2026 earnings indicates year-over-year increases of 14.8% and 9.7%, respectively. EPS estimates for both years have been unchanged over the past week.Earnings Estimates Image Source: Zacks Investment Research Meanwhile, the consensus estimate for StoneCo’s 2025 and 2026 earnings calls for year-over-year rallies of 25.9% and 15.5%, respectively. EPS estimates for both year have been unchanged over the past week.Earnings Estimates Image Source: Zacks Investment Research Valuation: PYPL vs. STNEFrom 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 price-to-earnings (P/E), the PYPL stock is trading at 10.25X, below its one-year median, whereas StoneCo is currently trading at 7.56X, which is also below its one-year median.Price-to-Earnings F12M Image Source: Zacks Investment Research Price Performance: PYPL vs. STNEOver the past year, STNE shares have outperformed PYPL and the S&P 500 composite.Price Performance Image Source: Zacks Investment Research Conclusion: StoneCo Has the Edge Right NowPayPal 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, along with its superior growth outlook, offer greater upside potential in the near to medium terms.Currently, both STNE and PYPL carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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(STNE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks