SQ or PYPL - Which one is better longer term?

Short Answer: PYPL 

Long Answer: 

Although SQ and PYPL are in the credit services business, fundamentally, they are different. PYPL has more concentration on "Online" transactions while "SQ" would prefer people to go offline from internet and rely on small businesses. 

SQ has been put under the bracket of "Software - Infrastructure" as it provides necessary infrastructure for small business to collect money from customers. 

But if we compare their valuation, revenue and profit - it shows completely different picture. 

Paypal is valued as of now as 90 Billion dollar company - slightly rich in PE as their profit is 3.5 Billion but forward PE comes out to be roughly 15 (which is more than reasonable PE). 3.5*20 = 70 Billion is roughly a good valuation for Paypal on current income, however, with the growth it is posting on year on year basis - 90 Billion (today's valuation) is reasonable. 

Paypal's 2017 Revenue was 13 Billion and 2022 Revenue was 26 Billion. They roughly doubled their revenue in 5 years and that is phenomenal growth. (20% on year on year basis). Same is true for their income. Now, there is a fear in market that many of these "online" companies saw their TOP during COVID and their growth will slow down. In my opinion, for Paypal, that will not be the case. Dollar is at high and transfer of money will remain consistent even if people go out and spend money elsewhere. There are no indications yet that their growth will slow down, Plus they have started credit card business to help with their growth scheme. 

SQ on the other hand had phenomenal 2021 year and perhaps it could be due to Crypto Boom. Their income though is shrinking year after year. From 0.88 EPS in 2019 to 0.36 EPS in 2021. SQ is valued at 41 Billion and they dont make money even in billions - its more like 166 Million. 

Both of them could be good investment, but if given a choice, I would prefer PYPL (because of the #'s that they have). Growing Revenue and Growing Profit and reasonable valuation. SQ can also outperform but that remain to be seen, it needs to be reflected in their balance sheet.