PayPal stock heads for longest winning streak on record amid bitcoin rally

PayPal and Square shares are rallying Tuesday even as shares of Mastercard Inc. MA, -0.49% and Visa Inc. V, -0.10%, which are more broadly levered to global spending, are on track to decline for the second-straight day. The recent surges for PayPal and Square highlight how recent strategic moves are resonating with investors, as the companies have made pushes to involve themselves in the world of cryptocurrency, which seems of growing investor interest.

“Both are levered to bitcoin, which has been increasing to all-time highs, which helps improve their momentum,” Mizuho analyst Dan Dolev told MarketWatch in an email. Bitcoin BTCUSD, +4.67% is up 9.3% over the past 10 trading sessions, and is on track to close at a record on Tuesday. In comparison, the S&P 500 index SPX, +0.45% is up 4.0% over the same time.

Square for years has allowed users of its Cash App to buy and sell bitcoin, while PayPal gave U.S. users the ability to buy and sell a variety of cryptocurrencies late last year. PayPal announced late last month that it was beginning the rollout of a function that would let people make purchases with their crypto holdings at merchants who use the company for payment processing.

When it comes to their merchant businesses, PayPal and Square are tied to somewhat different trends. PayPal relies on e-commerce, which saw growing adoption during the COVID-19 crisis, while Square has more exposure to smaller bricks-and-mortar sellers that have felt a sting during the pandemic.

Yet both companies could continue to see traction amid an economic recovery, Dolev argued. E-commerce remains “very elevated despite the reopening,” which could give investors more confidence that “e-comm is in a true secular upswing, and PayPal is not just a COVID wunderkind.”

As for Square, generally stronger consumer spending could help the company’s seller segment, he added.