This index fund has soared in popularity amongst ASX investors in recent years, thanks to its future-facing composition and tech-heavy exposure.

As my Fool colleague Bronwyn reported late last month, NDQ is one of the most sought-after ASX ETFs on our market. It is currently the seventh-most popular fund by funds under management. We also recently covered how NDQ was the fourth most-bought fund for customers using the Stake brokerage platform over the second half of the 2025 financial year.

The Betashares Nasdaq 100 ETF is a relatively simple index fund, covering the largest non-financial stocks listed on the US' Nasdaq stock exchange. The Nasdaq is known for housing most of America's best-known tech stocks. That includes all of the famous 'Magnificent 7', as well as companies like Airbnb, Netflix, Adobe and PayPal.

It's not just a tech ETF, though. Some other names that can be found in NDQ's holdings include Starbucks, Pepsico, Monster Beverage and Cadbury-owner Mondelez International.

But let's get down to the numbers.

How much would $10,000 invested in the NDQ ETF in 2020 be worth today?

Five years ago, on 5 November 2020, NDQ's ASX units were being priced at $27.59 each. Today, at the time of writing anyway, those same units are worth $57.85 each. That's a gain worth 110%. Or approximately 15.95% per annum.

Not bad. This means investors would have more than doubled their capital investment alone, with that $10,000 turning into $20,968 or so today. Most of these gains came from simple stock price appreciation. However, some would also have come from currency returns too.

Although NDQ is an ASX-listed ETF, its portfolio is priced in US dollars. That means that its returns need to be converted from US dollars to Australian dollars before we can assess them. The Australian dollar is almost 10% lower today against the greenback than it was five years ago. As a result, his would have provided our returns with an additional (and meaningful) boost.

However, that's not where the story ends. As Betashares NASDAQ 100 ETF investors would know, this fund also pays out periodic dividend distributions.

Since late 2020 and today, investors have enjoyed around $4.32 in dividend distributions per NDQ unit. That would see our investor bank another $1,636 in returns over the five-year period.

As such, we can conclude that a $10,000 investment in the ASX's NDQ ETF would be worth a total of roughly $22,603.50 right now. Again, not bad.

The post $10,000 invested in the NDQ ETF 5 years ago is now worth… appeared first on The Motley Fool Australia.

Shares in the All Ordinaries Index (ASX: XAO) buy now, pay later (BNPL) stock closed yesterday trading for 30 cents. During the Thursday lunch hour, shares are swapping hands for 28.5 cents apiece, down 3.3%.

For some context, the All Ordinaries is down 1.0% at this same time.

Here's what's got investors jittery.

What's pressuring the Zip share price on Thursday?

With today's losses factored in, the Zip share price is down a painful 53% over 12 months.

Zip isn't the only stock in the red today, though, with the broader BNPL sector coming under selling pressure across the globe.

Here in Australia, the Block Inc (ASX: SQ2) share price, for example, is down a steep 7.9%.

The turmoil across the pay by instalments companies looks to have been spurred by France-based payments company, Worldline SA (EPA: WLN).

The Worldline share price closed down 59% on the French market overnight after the company cut its full year guidance. With recession concerns mounting in the EU, Worldline cited a slowdown in sales, particularly in its core market Germany, for its reduced full-year forecasts.

The sell-off spread to other European listed payments companies and also impacted US listed BNPL stocks.

In fact, the Zip share price is faring better than most, with Affirm Holdings Inc (NASDAQ: AFRM) shares falling 15% and PayPal Holdings Inc (NASDAQ: PYPL) shares closing down 5% in US markets overnight.

Atop recession fears, BNPL investors are awakening to the fact that global interest rates may remain higher for longer than previously priced in.

Here in Australia, the odds of another rate hike from the RBA increased yesterday after the ABS reported that annual inflation of 5.4% was still running well above the central bank's target range of 2% to 3%.

Earlier this month, newly appointed RBA chair Michele Bullock reiterated that the bank "remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome".

The series of rate increases ushered in over the past year and a half have already thrown up significant headwinds for the Zip share price. Shareholders will be hoping the RBA takes a dovish turn.

The post Down 53% in a year, why is the Zip share price tanking again today? appeared first on The Motley Fool Australia.

Google's parent company Alphabet Inc. (NASDAQ: GOOG)(NASDAQ: GOOGL) may be considering an acquisition of image-browsing platform Pinterest (NYSE: PINS). And that's because Pinterest possesses something extremely valuable that Alphabet would definitely like to have in a changing advertising economy.

Don't be fooled by a stock price that's down more than 70% from its all-time high. Here's the case for Pinterest and its potential suitor.

Where did this crazy rumor even come from?

Alphabet CEO Sundar Pichai spoke at the Code Conference earlier this month. He talked about many things going on with the company, including developments in the advertising market and concerns over artificial intelligence. Late in the talk, however, the interviewer turned the conversation toward mergers and acquisitions (M&A).

When asked if Pinterest was an acquisition target, Pichai stammered, "Look, I can't comment on a few, on any M&A deals." He then smiled sheepishly at the interviewer's suggestion that he could comment if he wanted to do so.

Perhaps Pichai was simply uncomfortable with the entire interview and struggled for an answer regarding Pinterest for this reason. However, the interviewer had just asked Pichai the same question regarding Twitter, Inc.(NYSE: TWTR), which he seemingly answered with ease. Alphabet isn't looking to buy Twitter, he said. The drama unfolding with Elon Musk has Pichai simply watching with "popcorn."

Pichai answered the question on acquiring Twitter. He didn't with Pinterest. And that leads some to believe that Alphabet has indeed reached out to Pinterest about a potential acquisition. 

Why Pinterest is a valuable acquisition target

Pichai's comments at the Code Conference is just circumstantial evidence. However, it wouldn't be the first time a big tech company would be interested in buying out Pinterest. PayPal Holdings, Inc.(NASDAQ: PYPL) was reportedly trying to buy Pinterest for $45 billion last year. PayPal's market capitalisation was around $300 billion at the time compared to Pinterest's then market cap of around $35 billion.

Both market caps have fallen mightily -- PayPal is down to about $105 billion whereas Pinterest is worth about $16 billion. And when it comes to Pinterest, its stock has been crushed because of slumping user metrics. It was once believed that Pinterest could potentially attract billions of users like Meta Platforms, Inc.(NASDAQ: META). However, the company peaked at 478 million monthly active users way back in the first quarter of 2021 and has since steadily declined to where it is today at just 433 million monthly active users.

On the surface, Pinterest's relevance is dwindling, which hardly seems like a platform worthy of PayPal and Alphabet's attention. However, Pinterest has steadily increased its monetization, going from $1.04 in average revenue per active user (ARPU) in Q1 2021 to $1.54 in Q2 2022. That's substantial.

Here's what Alphabet and PayPal are likely interested in: Pinterest has steadily increased its monetization thanks to its truly unique perspectives and insights into consumer behaviors. Year after year, the company proves it knows what people want with its annual Pinterest Predicts report -- the report was proven to be 80% correct in 2021.

For Alphabet's part, it generates most of its revenue through advertising. But the game is changing for advertising stocks. Consumers are increasingly concerned about privacy, and governments are regulating more. For this reason, Alphabet intends to do away with third-party cookies in 2024. But that risks making its ads less effective, and that would consequently lead to lower ad rates. 

Acquiring Pinterest and its consumer insights could dramatically help it remain more effective at advertising while also doing away with tracking. 

For PayPal, investors often forget it has a merchant side of its business -- 35 million active merchant accounts as of the second quarter of 2022, up from 32 million in the same quarter of 2021. Part of the company's strategy is to provide data on consumer intent to merchants so they can better know what to prioritize. This is exactly what Pinterest could have provided had the deal gone through.

Pinterest is still a valuable company

In the end, we don't know for sure if Alphabet is really intent on acquiring Pinterest or whether we'll never hear rumblings of this rumor again. However, I believe we have seen that Pinterest's business has value even if it's struggled to create value for shareholders since going public in 2019.

That said, I believe Pinterest is still a stock worth buying today despite its user struggles. Its ARPU growth demonstrates its value to advertisers, likely due to its perspectives on consumer trends. That could make Pinterest an even more attractive platform if the global economy goes into a recession; advertisers would likely decrease spending overall and concentrate spending on platforms where returns are the best. And Pinterest would be a top contender for those concentrated dollars.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is Google really trying to buy Pinterest? appeared first on The Motley Fool Australia.

Recessionary concerns, a few lackluster quarters, overpromised and underdelivered projections, and a tech crash have absolutely crushed payment processing giant PayPal Holdings, Inc. (NASDAQ: PYPL) this year. Shares are trading 67% lower than last year.

A drop like this is understandably concerning for investors, but there are several reasons it could also be a tremendous buying opportunity. Here's a closer look at why investing at today's rock-bottom prices is a genius move right now.

Making the right moves

The second quarter of 2022 was PayPal's first non-profitable quarter since its spinoff from eBay Inc.(NASDAQ: EBAY) in 2015. Its earnings per share (EPS) fell to a loss of $0.29 per share from a gain of $1.01 last year, and its operating margin dropped by around 7%.

This loss wasn't because the company did less business -- in fact, revenue was 9% higher than last year. It was related to higher costs of borrowing and increased operational costs, as well as one-time charges from new products in PayPal's investment portfolio.

On the positive side, free cash flow was up 22% year over year. Payment transactions rose 16%, boosting total payment volume (TPV) by 9%. And PayPal is directly addressing the increased cost of borrowing and operating with targeted cost-saving measures. The company plans a $900 million cost-saving initiative that should help improve its bottom line.

The fintech company also has $15.6 billion in cash and cash equivalents, and only $13.6 billion in debt, including its latest round of issuance.

Recent upgrades mean prices are likely to rise

PayPal's focused moves to improve its operational costs have given analysts a fresh outlook on the stock, prompting those from Bank of America Corporation (NYSE:BAC) and Raymond James to upgrade their ratings on PayPal over the past few weeks. Share prices haven't jumped much in response, up just 1.5% from before the upgrades, but the analyst moves are a positive sign that investor confidence may also be returning. During that same time, the S&P 500 index was down 1.5%.

Cost savings alone are not going to be enough to rally PayPal's share price back to previous highs. That will take time. Short-term headwinds will likely impact the company if a recession unfolds, as many experts are predicting. But if we think long-term, its growth prospects still look promising.

PayPal was the first payment processing company in the world. Reinventing the services it offers its customers so it can adapt to new technologies and grow is nothing new. It has sufficient cash on hand to help it withstand a downturn, and today's pricing means that investors are in an excellent position to profit if the company does make strides toward recovery.

As a long-term, patient investor, I personally believe PayPal is a genius buy right now.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why buying PayPal is a genius move right now appeared first on The Motley Fool Australia.

This year has been challenging for investors, with the S&P 500 and the Nasdaq Composite indexes slipping into bear markets. Persistent inflation and rising interest rates have taken center stage, dragging down nearly all asset classes.

A bear market can be a scary time for investors. Nobody likes seeing their portfolio going down. However, at times like this, it helps to think like Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett.

Buffett achieved his (and Berkshire's) decades-long success by thinking about the long term and owning companies (or stocks in companies) for years or even decades. you would do well to follow his investing techniques and focus on quality companies, building up your positions slowly rather than trying to time a market bottom. Bear markets offer opportunities to buy stocks at discounted prices, and two Buffett stocks you could invest $1,000 in today that trade at a discount are Visa Inc. (NYSE: V) and Ally Financial (NYSE: ALLY). Let's take a look at why these two Buffett stocks are great long-term investing options.

1. Visa

Visa helps people in more than 200 countries move their money via debit cards, credit cards, and other payment products. Nearly 49% of American adults had a Visa card as of 2020, while about 39% have a Mastercard Incorporated (NYSE: MA) and 15% have an American Express Company (NYSE: AXP). This gives Visa a sizable lead in the payment-processing space: In 2020, the company processed a total volume of $11.4 billion, outpacing Mastercard and American Express, which processed $6.3 billion and $1 billion, respectively.  

The payment company has a sizable lead over the competition because of its widely accepted cards. Not only that, but Visa continues to innovate and expand its offerings to stay ahead of the competition.

Its business model is relatively asset-light, meaning the company doesn't need to invest much of its capital in assets. As a result, Visa has very high profit margins, averaging 44% over the past decade. It's also a money-making machine, generating over $16 billion in free cash flow over the past year. The company can use this cash to make acquisitions, pay dividends, or buy back its stock.

Data by YCharts.

Visa stock has performed well, and in the first nine months of its fiscal year, its net revenue was up 22.6%, and net income grew by 26%. The company keeps performing despite high levels of inflation, which CEO Al Kelly has said, "net-net, historically, inflation has been a positive for us." Because the company earns fees as a percentage of payment volume, rising costs of goods and services increase transaction size, helping Visa rake in more fee income.  

Visa's long-term prospects look bright. According to a study by BlueWeave Consulting, the global digital payment marketplace will grow 12% annually through 2028. However, it does face increasing competition from the likes of PayPal Holdings, Inc. (NYSE: PYPL) and major banks from their money transfer service, Zelle.

To protect its top spot, Visa has acquired fintech partners that enhance its existing business. It looked to break into the open banking space by buying Plaid for $5.3 billion in 2020. However, regulators shot down the deal, and Visa instead acquired Tink for $2.1 billion, an open banking network in Europe.

Open banking could be the future of finance. According to Allied Market Research, the open banking market allows nonbank companies to build financial products and is projected to grow at 22% annually through 2032. By acquiring Tink and staying one step ahead of the competition, Visa is in an excellent position to continue delivering for its investors.

2. Ally Financial

Ally Financial is an all-digital consumer bank that specializes in automotive lending. Warren Buffett increased Berkshire's stake in the bank in the second quarter by buying 21 million shares. Berkshire's $1 billion stake gives Buffett and Berkshire over 9% ownership in the bank. Ally Financial trades at a low valuation, and its price-to-tangible-book-value ratio of just 0.93 is likely one reason Buffett upped Berkshire's stake.

The bank benefited from shortages in used cars in the past couple of years, which increased the costs of used vehicles. In the second quarter, the bank originated $13.3 billion in auto loans, its highest quarter of originations since 2006.  

Ally also benefited from higher interest rates. The Federal Reserve has raised its federal funds rate from near 0% to 2.5% since March, pushing funding costs up for all loans. Ally's net interest margin, the difference between the interest it earns on its loans and the interest it pays on deposits, improved from 3.55% last year to over 4% in the second quarter.  

Ally Bank has benefited from being one of the first all-digital banks, with its deposit customers growing 20% annually since it was founded in 2009. According to Allied Market Research, the digital banking market is forecast to grow at 13.6% annually through 2027. Ally believes its purpose-driven culture will help it continue to grow in the digital banking space. This, coupled with the bank's growing suite of products like Ally Invest, its brokerage product, and Ally Lending, should provide it with multiple avenues of growth in the coming years.

Another thing to like about Ally is how much cash it returns to its shareholders. This year the bank has spent $1.2 billion buying back its stock and paid out another $259 million in dividends. Ally stock trades below book value, giving the stock a good margin for safety, and its dividend yield of 3.56% makes it a solid investment for those looking for passive income.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Got $1,000? 2 top Warren Buffett stocks to buy for the long term appeared first on The Motley Fool Australia.

I believe you should buy stocks right now, and I'll support this position with insights from people far more qualified to walk us through this than I am.

With so much uncertainty in the world and in the economy, I know that now can seem like a poor time to invest. But stock pickers could be in a more advantageous position now than they've been for over a decade.

Bull market geniuses or ducks in the rain?

From March 2009 through the end of 2021, the S&P 500 was up over 500%. The march upward only had a couple of brief interruptions, as this chart shows.

^SPX data by YCharts.

If you were buying and holding stocks during this period, it was almost difficult to lose money.

It reminds me of something Berkshire Hathaway Inc.(NYSE: BRKB) CEO Warren Buffett once said. Referencing Berkshire's 34% gain in 1997 in his letter to shareholders, Buffett wrote: "Last year's performance was no great triumph: Any investor can chalk up large returns when stocks soar, as they did in 1997. In a bull market, one must avoid the error of the preening duck that quacks boastfully after a torrential rainstorm, thinking that its paddling skills have caused it to rise in the world." 

To restate Buffett's point, almost all investors look like geniuses in a bull market because stocks are going up everywhere -- just buy something. And this is partly due to the broader economy, since there's a strong correlation between that and the market. When the economy is strong, many businesses do well and their stocks go up.

However, we are entering a whole new world in 2022. The U.S. economy has declined for two consecutive quarters. And things could slow further because of the Federal Reserve, as it raises interest rates to combat inflation. As Fed Chairman Jerome Powell recently said, "Reducing inflation is likely to require a sustained period of below-trend growth."

According to Powell, increasing interest rates will continue to slow the economy. But it's also causing the cost of capital to increase, hurting businesses that need financing. 

The clock is ticking (for some)

The situation I've described is real. Even companies that have historically burned cash, like Snap Inc.(NYSE: SNAP), are pivoting. When it comes to profits, CEO Evan Spiegel recently said, "We must adapt our strategy accordingly." For this reason, the company is making several changes, including trying to better monetize its augmented-reality (AR) technology by launching an enterprise business.

But many unprofitable companies won't be able to adapt. The dot-com bubble more than two decades ago was a similar situation. The market hit its high in early 2000, but the writing was already on the wall. Talking to Forbes at the time, Ron Sege, then the Lycos CEO, said, "There is a certain sense of desperation and anxiety." Specifically, Sege was talking about insiders' desire to cash out and leave their companies in light of market conditions.

Insiders want out when their ability to generate shareholder value goes down. I believe that's the case right now for structurally unprofitable companies in light of changing economic conditions. As Etsy, Inc.(NASDAQ: ETSY) CEO Josh Silverman recently said, "I think we're going to see a reckoning." The torrential rain for Buffett's ducks is over.

However, if you're thinking about waiting to buy stocks until the shakeout is over, that might not be the best idea. The stock market looks ahead, and it sometimes starts recovering from rock bottom before the economy improves. So unless you know exactly when the economy will recover (you don't), you risk missing the stock market bottom.

^SPX data by YCharts.

To summarize up to this point, bull markets produce stock winners everywhere. Bearish market conditions like right now prioritize profits and disproportionately hurt weaker companies. And finally, timing the market bottom isn't easy. Now, here's what to do with this information.

The strong will get stronger

Sequoia Capital's Alfred Lin recently wrote in a presentation, "The slower growing companies that were doing it profitably now have the financial flexibility to take advantage of the pullback from cash burning companies." 

It's like what Motley Fool contributor Brian Stoffel says with his Antifragile Framework for investing: Stocks that are antifragile "get stronger when stress is applied." In other words, the present situation is going to be a long-term benefit for a handful of companies. And if you can identify these opportunities while the market is down, it can lead to some market-crushing results, which is why I believe now is a great time to still be buying stocks.

For instance, investors might take a look at PayPal Holdings, Inc. (NASDAQ: PYPL) stock. With so many unprofitable financial-technology companies out there, PayPal could be in a position of strength. The company has already curtailed spending to boost profits. And at a conference on Sept. 12, CEO Dan Schulman said that earnings per share (EPS) for the current quarter were "coming in a bit stronger than expected." And it's pivoting to greater profitability while still maintaining revenue growth north of 10%. 

Image-browsing app Pinterest (NYSE: PINS) and advertising-technology company PubMatic, Inc. (NASDAQ: PUBM) are two more businesses that can still thrive in the current market. Both companies are debt-free, are in cash-rich positions, and generate positive cash from operations, as this chart shows.

PINS total long-term debt (quarterly). Data by YCharts.

Granted, both Pinterest and PubMatic generate revenue from ads. And the advertising industry will likely struggle in a slowing economy. But that's kind of the point. As Lin said, these two have the financial flexibility to grab market share from cash-burning rivals.

In conclusion, investors will need to be more discerning than ever when picking stocks in 2022 and beyond. There are lots of problems, and many businesses will consequently be permanently impaired.

However, this will create amazing long-term opportunities for a select group of companies that I believe will result in life-changing gains over the years to come. I might not accurately identify all of these stocks. But it's why I want to be picking stocks now more than ever.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Should you really buy stocks now or wait a while longer? appeared first on The Motley Fool Australia.

The name change of Square to Block (NYSE: SQ) dramatically changed the narrative for the company. Once viewed as a pure fintech stock, it has pivoted to music streaming with Tidal and built a cryptocurrency ecosystem that makes it seem more like a conglomerate.

Consequently, Block's performance has become more closely aligned with that of Bitcoin (CRYPTO: BTC), reinforcing perceptions that it is a different enterprise. Nonetheless, a closer look at the company indicates that Block remains primarily Square and Cash App, and, at least for now, investors have little reason to consider its other ventures while evaluating the stock.

Block stock: Perception vs. reality

The state of Block stock has changed dramatically in a year. Last September, Block (still known as Square at the time) sold for more than $250 per share. Moreover, Jack Dorsey managed both Block and Twitter, Inc.(NYSE: TWTR), and Bitcoin was in a bull market.

Beginning in late November, Dorsey devoted himself to the company full-time, leading to the name change and emphasis on its Bitcoin-based segments, Bitcoin advancement company Spiral and Web platform TBD. Dorsey even predicted that Bitcoin would replace sovereign currencies.

Both Block and Bitcoin subsequently lost most of their value. Admittedly, most tech stocks have fallen, so one cannot blame Block's decline on Dorsey's prognostications. Still, the company's fortunes seem tied to Bitcoin. Since Dorsey became the full-time "Block Head," Block stock declined 65%, while Bitcoin is off 62%.

Unfortunately for Block shareholders, the stock may have fallen victim to a false perception. Technically, Bitcoin made up $3.5 billion of Block's $8.4 billion in revenue in the first half of 2022. However, since the company transacts the cryptocurrency, most of that "revenue" would count as payment volume if the accounting rules differed. After subtracting Bitcoin costs, real Bitcoin revenue amounts to only about $85 million in the first six months of the year, about 3% of gross profits.

The Square and Cash App ecosystems

Thus, instead of worrying about Bitcoin, Block investors should judge the company based on the Square and Cash App ecosystems, which still account for nearly all of the company's revenue. Cash App is a social payments platform that accommodates users' spending, deposits, and investing. Cash App also led the way in Bitcoin trading on its platform when it began trading the cryptocurrency in 2018. With this functionality, it boasts 47 million monthly active users and has beaten PayPal's Venmo for number of downloads on Apple Inc. (NASDAQ: AAPL)'s iPhone, according to MobileAction.

The Square segment also built a successful niche with businesses. The platform can accommodate nearly all of a business's financial needs. This includes transactions, payroll, inventory, point-of-sale, and loans. In the U.S., where it opened an industrial bank, Square can also manage a company's checking and savings accounts.

Additionally, it is moving across the developed world and currently operates in eight countries. Since three of the countries are in the EU, that foothold could mean a relatively easy move into the 24 EU countries it does not yet serve. Also, only $146 million of its gross profit for the first two quarters (around 5%) came from outside the U.S., meaning its non-U.S. markets hold significant potential for growth.

The state of Block stock

Overall, Block reported about $2.8 billion in gross profit in the first two quarters of 2022, growing 31% year over year. Still, operating expenses increased by 68% during that time, leading to a loss for the first half of the year of $417 million. Block earned $243 million in the same period one year ago.

Block's investments in its business may ease concerns about returning to losses. This is crucial, as investors have shown less leeway for money-losing companies in this bear market.

Another consideration is an expensive valuation, as its price-to-free-cash-flow ratio of 70 makes it considerably pricier than PayPal Holdings, Inc.(NASDAQ: PYPL) at 22 times free cash flow. Nonetheless, the aforementioned 31% gross profit growth for the first half of 2022 could help make Block a buy in this bear market due to its still rapid growth.

Admittedly, Bitcoin, Tidal, and other parts of Block may become a more consequential share of gross profits over time. However, considering the bright future of the Square ecosystem and Cash App, Block stock could make a massive comeback with or without its newer segments.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why you should buy Block stock (and it's not Bitcoin) appeared first on The Motley Fool Australia.

There's little question the iPhone remains both the flagship product and the chief money maker for Apple (NASDAQ: AAPL). The device accounted for roughly 52% of the tech giant's sales over the past 12 months, just as it did during the prior-year period. The popularity of the iPhone makes it difficult for any other product or service to move the needle for the company.

That said, Apple has an under-the-radar service that has quietly, and without much fanfare, become one of the company's fastest-growing revenue streams.

How do you want to pay for that?

Most investors don't even give Apple Pay a second thought, yet the iPhone's digital payment method has risen from relative obscurity when it was introduced in late 2014 to being indispensable for a large and growing number of iPhone users.

Consider this: About 10% of iPhone users had activated Apple Pay by 2016, according to research provided by venture capital firm Loup Ventures. That percentage doubled in 2017 and again in 2018. By 2020, activations had risen to 50%. The need for touch-free payment methods during the pandemic drove a surge of use, pushing activations to 75%. It's worth noting that just because Apple Pay is activated doesn't necessarily mean it's being used, but the trend is undeniable.

Apple Pay is also much more widely accepted now than it was in the early days. When it was introduced, only about 3% of retailers had the technology necessary to accept contactless payments. Now roughly 90% of merchants in the U.S. accept Apple Pay. 

Perhaps more importantly, Apple Pay is the leading payment app among teens, outpacing even PayPal's Venmo, according to Piper Sandler's semiannual Taking Stock With Teens survey. This suggests that Apple Pay could become even bigger as members of Generation Z -- the largest demographic yet -- become the primary breadwinners. 

Move the needle? Not bloody likely.

So what does this mean for Apple in terms of revenue? The truth is that given the massive size of its iPhone business -- which generated more than $200 billion in sales over the last 12 months -- it's unlikely that any other single business will move the needle for Apple, but the numbers are compelling nonetheless. Apple Pay generates billions of dollars in revenue for the iPhone maker. 

Apple's total revenue amounted to more than $387 billion over the trailing 12-month period. The company doesn't provide specific details regarding Apple Pay's contribution, but estimates suggest it accounts for roughly 1% of the total, or $3.88 billion, according to Loup Ventures. 

That's not all. While the U.S. has long lagged other developed nations in contactless payments, its overall adoption has reached a tipping point. This is thanks in part to pandemic-related safety protocols and greater acceptance of touchless payments by consumers.

A bigger piece of a growing pie

In its first-quarter earnings call, Visa (NYSE: V) revealed that it is "nearing 20% tap-to-pay penetration with key metro cities showing even stronger growth." The company said that a host of large cities, including Los Angeles, Miami, and Seattle, all exceeded 25% penetration. San Francisco, San Jose, and Oakland had surpassed 30%, and New York topped the list at 45%. This suggests that the overall adoption of touch-free payments is growing and Apple is well-positioned to reap the rewards.

Apple's influence isn't limited to the U.S. Early last year, the company reported it had a base of more than 1 billion active iPhones worldwide, a number that has no doubt increased in the year and a half since. Furthermore, Apple Pay is supported in 73 countries and regions around the world, a list that grows larger each year.

The iPhone will remain Apple's primary breadwinner for the foreseeable future. That said, Apple Pay is just one piece of a large and growing puzzle that should help drive Apple stock higher for years to come.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post This under-the-radar Apple business is growing by leaps and bounds appeared first on The Motley Fool Australia.

It may be tough to fathom how stocks can compound your wealth over years and decades. The secret to getting rich is nothing amazing -- it simply involves buying and owning great stocks over the long term. What you do need, however, is patience to stay the course as share prices can go through significant volatility in the short run.

That said, if the selection process is done correctly, all you need is to sit tight on your winners. Great companies can steadily grow their revenue, profits, and cash flow over time, catalyzing the rise in their stock price and helping you to get rich by the time retirement comes along.

The attributes you should look for include a strong and growing brand, trends that can sustain long-term growth, and a long runway for that growth to materialize. Technology companies qualify as great compounders because many have dominant brands and are well-positioned to grow along with digital adoption and technological advancements.

Here are three technology stocks with all the factors in place that can grow your pot of gold for your retirement.

Apple

Apple Inc. (NASDAQ: AAPL) must surely qualify as one of the most innovative technology companies in the world. The manufacturer of the iPhone has, time and again, proven that its brand alone is enough to endear a generation of loyal followers to its multitude of products, devices, and services. The technology behemoth has dipped just 5% year to date, despite a near-18% decline in the NASDAQ Composite index over the same period, a testament to its durability and resilience.

Financially, the company has continued to post increasing revenue and net income over the past three years despite the onset of the COVID-19 pandemic. For its fiscal 2019 (ended Sept. 28), net sales clocked in at $260.2 billion and rose to $365.8 billion by fiscal 2021. Net income soared by 71.3% over the same period to hit $94.7 billion. The technology giant has also continued raising its quarterly dividend after going through a 4-for-1 stock split in 2020.

Apple recently also reported a strong fiscal 2022 third quarter, with revenue hitting a record high of $83 billion, up 2% year over year. Its active installed base of devices also reached a new all-time high for all its major product categories, while a record number of people have ditched other brands to switch to its ubiquitous iPhone.

The company expects strong iPhone sales in 2023 despite a looming economic slowdown and has ordered its suppliers to assemble 90 million of them for the next iteration of its iPhone, the iPhone 14. Elsewhere, the company's innovation may surface again for the next version of its smart watch, allowing for an accurate temperature sensor to be incorporated into it. Investors can keep the faith that Apple's strong brand power and its continued innovation will help to steadily grow its loyal customer base.

PayPal

Payments company PayPal Holdings (NASDAQ: PYPL) has been an important conduit connecting merchants and their customers for many years. Its platform and digital wallet allow customers to conduct a wide variety of secure online transactions that have seen total payment volume (TPV) grow steadily for the company. Over the years, PayPal has also expanded its payment options, recently allowing customers in the U.K. to transact using cryptocurrencies such as Bitcoin and Ethereum.

The company's financial and operating metrics have also impressed. Net revenue climbed from $17.8 billion in 2019 to $25.4 billion in 2021, with net income jumping nearly 70% over the same period to $4.2 billion. For the first half of 2022, net revenue retained its uptrend, rising by 8.3% year over year.

PayPal has also committed to improving its operating margin in 2023 while authorizing a new $15 billion share repurchase plan. Total active accounts rose from 305 million in 2019 to 426 million in 2021, with TPV growing from $712 billion to $1.25 trillion over the two years. 

There's every indication PayPal can continue its momentum as the pandemic has accelerated digital adoption and e-commerce usage. The payments company is tapping this trend to continue growing its user base and TPV. In time, the increase in the number of users on its platform should also lift its revenue and net income.

MercadoLibre

MercadoLibre (NASDAQ: MELI) is the largest e-commerce player in Latin America. It not only provides a platform for buyers and sellers in the region to trade products, but also hosts a payments platform and operates a logistics fulfilment network to provide an all-encompassing fintech solution.

The company's financial growth has been stunning, with net revenue more than tripling from from $2.3 billion in 2019 to $7.1 billion in 2021. MercadoLibre went from a net loss of around $172 million in 2019 to a net profit of $83.3 million and has reported a strong surge in operating metrics along the way.

Gross merchandise volume (GMV), a measure of the transaction flow on the company's platform, doubled from $14 billion in 2019 to $28.3 billion in 2021, while TPV soared from $28.4 billion to $77.4 billion over the same period. Needless to say, the total items shipped and the number of payment transactions have also ballooned in tandem, making MercadoLibre one of the leading e-commerce players in the region.

The momentum has continued into 2022, with its second-quarter GMV reaching an all-time high of over $8.5 billion, up 22% year over year. The company's growth shows no sign of slowing as it launches improvements to its platform such as fast and free shipping for three-quarters of its GMV and a better navigation tool to encourage usage. Its fintech solutions division is also launching more financial services and increasing its access to credit to attract more users and merchants.

With a dominant market position in South America and a culture of continuous improvement, MercadoLibre looks set to continue its breakneck growth in the years ahead.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Boy, the good volatility sure is nice. The Nasdaq Composite Index (NASDAQ: .IXIC)  is up 329 points, or 2.7%, as of 2:34 p.m. ET on Aug. 3, 2022. Some of the biggest Nasdaq gainers include Moderna (NASDAQ: MRNA) and PayPal (NASDAQ: PYPL), both up after reporting earnings, and MercadoLibre (NASDAQ: MELI), ahead of earnings.

Shares of Okta (NASDAQ: OKTA) are on the rise, as well, after a competitor was acquired at a nice premium. Shares of social media giant Meta Platforms (NASDAQ: META) are up 5%, finally starting to reverse some of the losses of the past year following its relatively solid earnings results a few days ago. 

Upbeat earnings, high hopes leading to today's bounce

Both biotech-giant Moderna and payments-king PayPal reported second-quarter results before trading today. Moderna investors loved the 7% revenue growth and were happy with the $5.24 earnings per share that smoked expectations. In short, shareholders (and buyers) continue to have high expectations for the company.

However, it's not all roses (and COVID-19 booster shots). The company took a $499 million write-down for expired vaccine inventory -- more than double the amount in the first quarter -- and COVID-19 booster-shot volume and revenue has slowed. Moderna's biggest unanswered question: What is its next act if COVID-19 vaccines aren't the same cash cow in the coming years?

PayPal similarly reported better-than expected second-quarter results, with 13% payment volume pushing revenue up 10%, adjusting for currency exchange. While the company reported much slower growth than it has experienced over the past few years, double-digit growth in an environment where people are returning to more in-person shopping is a very real positive. CEO Dan Schulman pointed out that the company's investment in digital wallets and online-checkout solutions is paying off with increased market share. 

Shares of Latin American e-commerce and payments-giant MercadoLibre are also rocketing higher today, ahead of the company's earnings report, which is scheduled after market close on Wednesday. Like other e-commerce and web-based companies over the past year, its stock has been pummeled. PayPal and Amazon both turned in results investors liked this week, and it seems like investors have high hopes for MercadoLibre, too. 

Okta gets a buyout premium

Cybersecurity is one of the hottest segments out there right now. Billions of dollars will flow into the sector from corporate budgets in the years to come as companies take steps to protect their data and infrastructure from bad actors.

Private-equity firm Thoma Bravo certainly sees the potential. Today's deal for it to buy Ping Identity (NYSE: PING) for a 63% premium to its prior share price is strong evidence of that. 

Investors also seem to believe that Okta, a leader in identity verification and access management, might very well be worth a good bit more than Mr. Market has been valuing it lately. 

Has Meta finally bottomed?

Meta Platforms investors may have finally seen peak pessimism pass. The shares are still down more than half from the company's all-time high. This occurred after it reported that second-quarter revenue fell, which was the first revenue decline in the company's history as a public company.

Since then, however, it seems that investors have processed the results and realized that active users grew on all its social media platforms and ad volume was up by double digits. In other words, the company's biggest challenge right now seems to be weak ad demand overall, and that's pulling down prices. This is a cyclical, temporary concern and maybe not as big a problem as it has seemed.

Despite its challenges, Meta remains head and shoulders above every other social media company as an ad platform. At 14 times trailing earnings and 17 times expected forward earnings, Meta's shares are getting very attractive, and today's upwards movement supports that. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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While the ASX 200 is up a healthy 0.4% in late morning trade, the S&P/ASX All Technology Index (ASX: XTX) – which contains some smaller tech shares outside of the ASX 200 – is up an impressive 2.41%.

Australia's big tech stocks are broadly charging higher following a strong lead from US technology companies yesterday (overnight Aussie time).

What happened with US tech stocks?

Yesterday saw some more strong earnings results from some of the biggest US tech stocks.

Moderna Inc (NASDAQ: MRNA) closed 16% higher on the back of its earnings report.

And PayPal Holdings Inc (NASDAQ: PYPL) leapt 9.3% on the back of its results.

Along with some other strong performers, this saw the tech-heavy NASDAQ 100 close up 2.7%, reaching its highest level since 4 May.

Commenting on the strength of the US reporting season, chief market strategist at B. Riley Wealth Art Hogan said (courtesy of Bloomberg), "Now that we're 70% through the earnings reporting season, we can clearly say that it's not the earnings Armageddon that many had feared. That's important."

And that strength looks to be offering some helpful tailwinds for ASX 200 tech shares today.

ASX 200 tech shares leaping higher

It's a sea of green among the ASX 200 tech shares.

The Xero Ltd (ASX: XRO) price is up 1% at the time of writing, having earlier posted gains of 3.4%.

Shares in the online accounting and business services closed at $96.90 yesterday and are currently trading for $97.85.

WiseTech Global Ltd (ASX: WTC) is also enjoying a healthy boost today. Though like Xero, it's given back much of its early morning gains.

After leaping 4.2% higher earlier today, shares in the global logistics software solutions provider are up 1.22% at the time of writing.

As for Nextdc Ltd (ASX: NXT), the data centre operator is up 1.69%.

The biggest gains among the ASX 200 tech shares today are being realised by Block Inc (ASX: SQ2), owner of Afterpay.

The Block share price is up a whopping 9.69% at the time of writing, currently trading for $127.00 per share.

This comes after a stellar run for Block's US-listed shares, which closed up 11.4% on the NYSE yesterday.

The post Why are ASX 200 tech shares having such a stellar run today? appeared first on The Motley Fool Australia.

In response, short-term interest rates moved higher, with two-year Treasuries climbing back above 3%. 

Quoted on MarketWatch, Neil Dutta, head of economics at Renaissance Macro Research, opined this perhaps "caps the upside to equity multiples".

2) Try telling that to PayPal shareholders, of which I am one. 

This morning, after the US market close, even though the payments giant reported second quarter revenue growth of just 9%, the PayPal share price jumped more than 10% higher after saying activist investor Elliott Investment Management is now one of its largest shareholders.

PayPal also raised its forecast for earnings per share for the year to a range of $3.87 to $3.97, putting PayPal on a forward P/E multiple of around 25 times earnings.

In the heady days of cheap money, this was cheap. In today's interest rate environment, especially for a company that only grew its second quarter top line by 9%, PayPal shares look fully valued. Still, I'm happy to celebrate today's win. 

3) The S&P/ASX 200 Index (ASX: XJO) has fallen around 0.5% in early Wednesday trade, likely following US markets lower, as commodity stocks weighed on the benchmark index.  

With global equity markets adding roughly 10% in the past few weeks, a period in which the share prices of some of the previously beaten and battered stocks like Megaport (ASX: MP1) and Life360 (ASX: 360) have risen from the dead, perhaps we're in a holding period in advance of reporting season.

4) In contrast to the US — where the latest inflation print was 9.1% — in light of a less hawkish tone from RBA governor Philip Lowe, some economists are suggesting the next interest rate rise will be a more moderate 25 basis points.

Quoted in the AFR, HSBC chief economist Paul Bloxham said he expects the RBA will pivot to smaller hikes from here as "the cooling housing market, weakening consumer spending and global downturn are set to worsen in the next few months".

Better news for equity markets, but tougher times ahead for consumers. In these inflationary times, it's hard to have your cake and eat it.

4) Earnings season is just kicking off here in Australia, with Pinnacle Investment Management (ASX: PNI) quick off the blocks, reporting a 14% jump in full-year profits and a 22% increase in its full-year fully-franked dividend.

Pinnacle reported a rare 6% drop in total funds under management (FUM) as volatile equity markets weighed on the fund manager. 

Still, considering the extreme dislocations investors have experienced, particularly over the past six months, it's a solid result and a testament to Pinnacle's diversified affiliate platform. 

The Pinnacle Investment Management share price soared almost 13% higher in morning trade, going some way to offset the near 40% fall from its November 2021 peak. 

In hindsight, like so many companies, as the great bull market neared its peak, it's clear the Pinnacle share price got ahead of itself.

5) Stating the obvious, it's been a tough year for most fund managers. Bucking the trend however was the WAM Leaders Ltd (ASX: WLE) investment portfolio. It increased by 9.7% for FY22, handily outperforming the index, which fell 6.5%.

With gross assets of more than $1.5 billion, WAM Leaders is one of the largest listed investment companies (LICs) on the ASX. The portfolio has holdings in many ASX 200 companies, including Commonwealth Bank of Australia (ASX: CBA), BHP Group (ASX: BHP) and National Australia Bank (ASX: NAB).

WAM Leaders trades on a fully-franked dividend yield of 5.3%. It's good money, even as term deposit rates edge higher.

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While many investors may not realize it yet, PayPal Holdings, Inc. (NASDAQ: PYPL) has been steadily laying the groundwork to profit from any future scenario in which cryptocurrencies play a major role in digital payments worldwide. The biggest step, of course, was the company's decision in October 2020 to enable users to buy, hold and sell a handful of cryptos, including Bitcoin (CRYPTO: BTC), directly via the PayPal platform. At the time, the decision was widely hailed as proof that crypto was going mainstream. 

Despite a pullback in the broader crypto market this year, PayPal seems determined to march ahead with its decision to embrace the crypto future of digital payments. At this year's World Economic Forum in Switzerland, PayPal was very bullish on the launch of new cryptocurrency and blockchain services. 

Where is PayPal now with crypto?

Right now, there are two key components to PayPal's crypto strategy. One of these is the consumer-facing side. By making it possible for users to buy and sell Bitcoin, PayPal (which owns Venmo) is arguably the best on-ramp for everyday people to learn about, explore and experiment with crypto. Many people have a long relationship with PayPal dating back to the first internet boom and have been using PayPal for everything from e-commerce transactions to sending out invoices for their small businesses. Moreover, PayPal has simplified crypto to the point where you don't have to worry about opening new accounts, storing new passwords or creating new digital wallets.  

While this transaction activity from consumers might not contribute significantly to bottom-line earnings now, there is a potential indirect psychological effect that's worth noting. In late 2020, Mizuho Securities surveyed 400 early crypto adopters on PayPal and found that a majority of them had more engagement overall than regular users, and were more likely to view PayPal as the center of their digital payment world. In other words, crypto could be the "hook" that attracts digitally savvy users and incentivizes them to use PayPal more often.

The other key component of the strategy is the merchant-facing side. If PayPal makes it easy for merchants to accept crypto as a form of payment, that could be a game-changer in terms of transaction volume. Just think about all the high-profile luxury brands (including Gucci, Balenciaga and TAG Heuer)  that have recently announced they are now accepting crypto payments. Adoption in the luxury, high-end of the market will eventually spill over into other industries, such as travel and automotive. After all, thanks to Elon Musk, it's no longer unthinkable to pay in Bitcoin for a shiny, new $50,000 vehicle.

Is PayPal really committed to crypto?

PayPal appears to be dedicated to the future of digital currencies. In fact, as far back as 2014, PayPal was debating the merits of enabling users to send Bitcoin to each other.  PayPal has also invested in blockchain companies, filed blockchain-related patents and partnered with companies like Coinbase Global, Inc. (NASDAQ: COIN). And, in 2019, PayPal was one of the first companies to join the Libra Association, which pledged to create a new global digital currency built on blockchain technology. 

And that's where things get really interesting, because rumors have been floating around for nearly six months that PayPal is on the cusp of introducing a new stablecoin based on the U.S. dollar called PayPal Coin. In layperson's terms, a stablecoin is a cryptocurrency that is pegged 1:1 to another currency or commodity. This reduces significantly the risk of price volatility for online transactions. Consider a hypothetical case where you have saved $10,000 in crypto for an amazing summer vacation. If you have your money in Bitcoin, you never really know how much your Bitcoin is going to be worth 1 day, 1 week or 1 month from now. But with a stablecoin, you know that your $10,000 in crypto is going to be worth $10,000.  Of course, the big caveat here is that the recent meltdown of Terra (CRYPTO: LUNA) has cast a dark pall over the idea of stablecoins in general.

A new investment thesis for PayPal

If you take a big picture view, the investment thesis for PayPal becomes very exciting. If cryptocurrencies really are the future of online payments and transactions, then PayPal is well-positioned for future growth on a massive, worldwide scale. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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With many top stocks on sale right now, every investor needs to know about one of the best-kept secrets on Wall Street.

Within 45 days of the last day of the previous calendar quarter, professional money managers who oversee $100 million or more in assets are required to disclose their holdings on Form 13F with the Securities and Exchange Commission. This public disclosure requirement gives others (including retail investors) the ability to peek at the recent moves of some of the most successful investors in the world, and it can be super valuable in times like these.

When market volatility hits abnormal extremes like it has in the last few months, it's not surprising to see some of these top investors picking up their buying and selling activity. Let's look at two popular stocks that could be significantly undervalued right now and have gotten some attention from top-level investors.

1. Meta Platforms

Facebook operator Meta Platforms (NASDAQ: FB) has seen its stock plummet this year over several issues. The war in Ukraine and uncertainty about the US. economy have caused advertisers to rethink their spending budgets, hurting social media companies that generate revenue primarily from advertising.

Facebook has also taken a hit from Apple's privacy changes in iOS that restrict app developers from tracking users' activity for the purpose of delivering more relevant ads. 

Investors want to see more of the 20%-plus revenue growth that Meta Platforms was reporting through 2021, but the company reported top-line year-over-year growth of just 7% in the first quarter. Wall Street is more focused on making money now, so regardless of how great Meta's prospects look over the long term, the stock is down primarily due to a weak outlook for growth in 2022. This gives patient investors a great opportunity to buy this tech giant at a deeply discounted valuation.

A few investors adding to their position in the first quarter were Pat Dorsey of Dorsey Asset Management, Michael Burry of Scion Asset Management (who famously predicted the 2008 mortgage crisis), and the investment firm Ruane, Cunniff & Goldfarb, which manages the Sequoia Fund.  

These investors obviously believe Meta is undervalued and should trade for a much higher price. Speaking to the company's long-term value, CEO Mark Zuckerberg mentioned during the first-quarter earnings call that more people are using the company's services than ever before. Meta's apps, including Facebook and Instagram, are massively popular and still give the company opportunities to grow, especially as more users are starting to shop in online stores through Instagram.

The company is directing more investment toward short-form video, which is more in demand by users, and also investing more in artificial-intelligence-driven recommendation models to deliver more relevant results for users and advertisers over the next few years. "On the Family of Apps side, I am confident that we can return to better revenue growth rates over time and sustain high operating margins," Zuckerberg said. 

Meta also offers additional upside potential if Zuckerberg's vision of the metaverse comes to fruition. It's for these reasons that the sell-off in the shares looks like a great buying opportunity.

2. PayPal Holdings

Share prices of PayPal Holdings (NASDAQ: PYPL) are down 57% year to date. The digital payments leader is experiencing slowing growth, which can be attributed to soft e-commerce spending compared to a year ago when people were receiving stimulus checks. More people are also returning to local stores to shop, which is dampening the volume that PayPal normally sees from people using its online checkout services. 

In the first quarter, PayPal reported growth in total payment volume of just 13% year over year, which is well below the 20%-plus numbers that the company has consistently reported for many years. The company generates revenue from fees charged on each transaction, so revenue growth has decelerated too.

But there is still a lot to like here if you're focused on the long-term value of the business -- and the most successful managers usually buy and sell stocks with a focus on a company's long-term intrinsic value. PayPal is well entrenched in the digital payment landscape, with 426 million active customer accounts. It also has 34 million businesses using its services for checkout. 

PayPal has a ubiquitous brand in e-commerce, which no one thinks is going to stop growing over the coming decades. Research from eMarketer projects e-commerce spending to grow 50% to $7.4 trillion by 2025 and PayPal will almost certainly ride that wave, along with its many competitors in mobile payments.

This outlook for growth explains why several notable value investors were buying shares in the first quarter, including Pat Dorsey, David Rolfe of Wedgewood Partners, and David Katz of Matrix Advisors Value. 

CEO Dan Schulman said he believes that PayPal will bounce back and deliver more growth. During the recent earnings call, he mentioned that we're going to see economic cycles come and go, but "that does not take away at all the fundamental secular tailwinds that we're going to benefit from long term, which are the increasing proliferation of e-commerce and digital payments." 

The stock's sell-off means the market has much lower expectations for growth. This is setting up the potential for PayPal to deliver better-than-expected results over the next year, which could make it a great investment from these lows.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Think about personal computers in the early 1980s. The internet in the 1990s. Smartphones in the first decade of this century. All of them represented investing opportunities with tremendous potential.

You can't travel back in time to buy the top stocks in these areas. However, there are still some areas that could be massive opportunities that you can invest in with a new year right around the corner. Here are five unstoppable trends to invest $5,000 in for 2022.

1. Artificial intelligence

Artificial intelligence (AI) has already become commonplace in our lives. Some of the ways are easy to spot, such as the virtual AI assistants on phones and home devices. Others aren't as obvious -- for example, many websites use AI to improve their product recommendations. But you can bet that AI is going to play an even bigger role in the future.

There are plenty of AI stocks that you could buy. I'd put Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) near the top of that list.

Data provides the fuel for AI apps -- and Alphabet arguably has more data than any other company. Alphabet uses AI extensively in its apps. Its Waymo business is a leader in self-driving-car technology. And its DeepMind ranks as one of the leading researchers in advancing AI. 

2. Digital payments

Cash isn't king anymore -- at least not the physical kind. The adoption of digital payments is rapidly pushing cash or cheques to the side. Maybe these physical forms of payment won't totally disappear anytime soon, but their use will almost certainly continue to decline.

PayPal (NASDAQ: PYPL) ranks as a top leader in digital payments. Its shares are down quite a bit from their highs this year. However, the long-term prospects for the company remain strong. PayPal has the most widely accepted online digital wallet. Its Venmo app is gaining momentum, especially with Amazon.com (NASDAQ: AMZN) beginning to accept it as a payment in 2022. 

The company should have plenty of growth opportunities ahead as digital payments are used more frequently in brick-and-mortar stores. In the war on cash, PayPal appears to be a five-star general.

3. E-commerce

E-commerce stands as one of the top growth drivers for the increased use of digital payments. But while people have been shopping online for more than two decades, e-commerce is still only in its early stages. That's especially the case in emerging markets.

You won't find many better e-commerce stocks to buy than MercadoLibre (NASDAQ: MELI) in serving emerging markets. The company is the e-commerce leader in Latin America. The e-commerce market share penetration in the region is expected to double within the next four years. MercadoLibre will probably be the biggest winner as this happens.

The company is also pioneering digital payments in Latin America with its Mercado Pago platform. It offers fulfilment services including logistics and warehousing for merchants as well. With its e-commerce dominance and other products and services, MercadoLibre could make investors a lot of money over the next decade and beyond.

4. Genomics

A genomics revolution is underway. The ability to unravel the secrets of DNA is changing healthcare. Diseases can be diagnosed more accurately and quickly. Therapies are being developed that harness the power of genomics to treat and even cure diseases.

You won't have any problem finding stocks that could soar in this category. Vertex Pharmaceuticals (NASDAQ: VRTX), though, stands out as a top pick. The company currently enjoys a monopoly in treating the underlying genetic cause of cystic fibrosis. Its success in CF has enabled Vertex to build a promising pipeline.

Vertex and its partner, CRISPR Therapeutics, plan to file for regulatory approvals by the end of 2022 for a gene-editing therapy that effectively cures blood diseases beta-thalassemia and sickle cell disease. The big biotech is advancing a drug that targets the treatment of genetic kidney diseases into pivotal testing next year. And Vertex could even have a potential cure for type 1 diabetes in clinical development. 

5. Metaverse

It seems like nearly everyone is talking about the metaverse after Facebook changed its name to Meta Platforms and unveiled an ambitious strategy for building the virtual universe. Estimates vary on how much money might be made in the metaverse, but several analysts project the amount will be in the trillions of dollars annually.

Nvidia (NASDAQ: NVDA) should be front and centre as the metaverse market explodes. The company has already launched its Omniverse platform for 3D simulation and design collaboration. Nvidia CEO Jensen Huang thinks that one component of this platform -- Omniverse Avatar -- could have an addressable market of $40 billion per year.

But perhaps the biggest opportunity for Nvidia is in supplying the graphics chips that will be needed to power metaverse apps. The company's graphics processing units (GPUs) are considered by many as the gold standard for gaming systems today. The metaverse seems likely to boost the demand for Nvidia's GPUs in a huge way. Nvidia could look like a no-brainer stock to buy in retrospect as the metaverse becomes a reality.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The United States-based Consumer Financial Protection Bureau (CFPB) issued orders to 5 BNPL companies.

The bureau is undertaking the probe to see if BNPL players need to be better regulated and if US consumers are adequately protected.

At the time of writing, the Afterpay share price has plummeted 7.44% to $82.84, while Zip shares are trading 6.97% lower at $4.14.

ASX BNPL shares caught up in consumer probe

The 5 companies targeted in the probe include Afterpay, Zip, Affirm Holdings Inc (NASDAQ: AFRM), Paypal Holdings Inc (NASDAQ: PYPL) and Swedish fintech Klarna.

US investors responded swiftly to the news with Affirm shares crashing by 10.6%, while the Paypay share price lost 1%. It is likely that Paypay is better insulated as BNPL is not its main business.

In its release, the CFPB highlighted concerns over "accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology".

CFPB director Rohit Chopra said:

Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too.

We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.

Areas of concern

The watchdog is specifically concerned about three areas, including accumulation of debt. Unlike layaway (called layby here) that are typically used for the occasional big purchases, it believes BNPL can quickly become a regulator habit for consumers making smaller but more frequent purchases.

CFPB is concerned that BNPL users can quickly lose track of payments and their growing debt. Consumers can be hit with big fees for missing payments.

Further, as BNPL "credit" is relatively easily given, consumers could end up spending more than they intended.

Are better regulations needed internationally?

The other issue of concern is regulatory arbitrage where BNPL companies may not be following consumer protection laws. For instance, some BNPL products do not provide certain regulatory disclosures.

Also, BNPL applicants do not get the same protections compared to if they were applying for a credit card, even though the application process may look similar.

Afterpay and Zip shares facing more volatility

Finally, there's the issue of data harvesting. BNPL operators have access to valuable customer data, such as payment histories.

CFPB wants to understand how BNPL companies are using the data. Some companies may be using it for behavioural targeting and data monetisation. This is similar to criticisms levelled against Amazon.com, Inc (NASDAQ: AMZN).

Having said that, the US probe shouldn't come as too big a surprise to investors. Afterpay, Zip and other BNPL players in Australia have also been subject to similar investigations.

CFPB said it was working with its international partners in Australia, Sweden, Germany and the United Kingdom.

The post ASX BNPL shares tumble today amid US probe appeared first on The Motley Fool Australia.

What happened

Shares of PayPal Holdings (NASDAQ: PYPL) declined by 10.5% on Tuesday after the sales and profit outlook of the digital payments company fell short of the market's expectations. 

So what 

PayPal's revenue rose 13% year over year to $6.2 billion in the third quarter. The gains were fueled by a 26% rise in total payment volume, to $310 billion.

Notably, PayPal continues to add new users at a solid clip. The payments platform gained 13.3 million net new active accounts during the quarter, bringing its total account base to 416 million.

Moreover, PayPal's cash production remained strong. Operating and free cash flow climbed 15% and 20%, respectively, to $1.5 billion and $1.3 billion. That allowed PayPal to reward shareholders with $350 million in stock repurchases.

Now what 

But investors appeared to focus on PayPal's muted guidance. Management expects revenue of $6.85 billion to $6.95 billion and adjusted earnings per share of $1.12 in the fourth quarter. That was below Wall Street's estimates, which had called for revenue of $7.24 billion and adjusted per-share profits of $1.27. 

CEO Dan Schulman said during a conference call with analysts that multiple factors are contributing to PayPal's cautious outlook for the holiday shopping season: 

We are seeing the impact of global supply chain shortages in our merchant base. Consumer confidence has weakened with the absence of stimulus payments. And with the economy reopening, more people may be likely to do their holiday shopping in-store as confidence in delivery logistics is depressed from last year.

eBay's (NASDAQ: EBAY) transition to its new managed payment system is also weighing on PayPal's results. PayPal's eBay marketplaces volume declined 45% in the third quarter.

To help offset this lost payment volume, PayPal struck a deal with Amazon (NASDAQ: AMZN). Shoppers on Amazon will be able to use PayPal's popular Venmo payment service as a checkout option beginning in 2022.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why PayPal stock plunged on Tuesday appeared first on The Motley Fool Australia.

The United States-based payments giant released its results for the third quarter of 2021, which produced some mixed numbers. On the other hand, the company also announced it is partnering with Amazon.com Inc (NASDAQ: AMZN) to offer its Venmo payment option at the online checkout.

Despite this news, the PayPal share price is trading 4.3% lower to US$229.42 a pop in after-hours trade.

Let's take a look at the latest announcement.

One door closes, another one opens

A multi-decade partnership between PayPal and eBay Inc (NASDAQ: EBAY) has been coming to an end since the e-commerce platform failed to renew its agreement with the payment provider in 2018. According to its latest quarterly results, eBay now represents only 3% of the total payment volume for PayPal.

As the door closes on one e-commerce partnership, another has swung open. Favourably for PayPal shareholders, the company has moved up in the world in terms of partnership size. Today, the company announced the inking of a deal with the fifth-largest listed company in the world — Amazon.

Indeed, the new partnership will likely only increase PayPal's already established ubiquity in the payments world. At the end of the third quarter, the company's payment method was available across 75% of the top 1,500 North American and European retailers.

PayPal plans to launch its integration on Amazon in 2022, allowing customers to make purchases on the site using their Venmo accounts. Yet, the PayPal share price is down in after-hours trade today.

Commenting on the announcement, PayPal CEO Dan Schulman said:

This is obviously a very significant effort in our Venmo monetisation efforts. It marks the beginning of an exciting journey with Amazon, now that we're no longer constrained by the contractual obligations of the eBay operating agreement.

PayPay share price in review

The last month has been a bumpy ride for the US payments company. On 20 October, the market reacted with increased selling pressure after rumours surfaced that PayPal might have been looking to acquire social media service, Pinterest Inc (NYSE: PINS).

However, this rumour was later dispelled by PayPal, stating it was not pursuing Pinterest "at this time".

The PayPal share price is down 10% in the last month. As a result, the company is currently trading on price-to-earnings (P/E) ratio of 56 times.

The post PayPal strikes a deal with Amazon, what could this mean for the share price? appeared first on The Motley Fool Australia.

What happened 

So what

Now what

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Pinterest stock plunged on Monday appeared first on The Motley Fool Australia.

What happened

It's official: PayPal (NASDAQ: PYPL) is not buying Pinterest (NYSE: PINS).

After several days of dodging inquiries and declining to comment on rumors that the e-payments leader might be looking to buy the social media company in order to create a sort of social-shopping giant, PayPal finally issued a terse denial on Sunday: "In response to market rumors regarding a potential acquisition of Pinterest by PayPal, PayPal stated that it is not pursuing an acquisition of Pinterest at this time."      

Pinterest investors are obviously heartbroken -- that company's shares were down by 13% as of 9:50 a.m. EDT Monday. PayPal investors, on the other hand, are ecstatic. Shares of the fintech were up by 5%.

So what

And so, after five days of wondering, it comes down to this: Despite Monday morning's recovery, PayPal stock was still trading at a 7.1% discount to what it fetched before rumors began floating that a takeover was imminent. But Pinterest shares, too, were down -- a solid 10% from pre-rumor prices.

And for traders who tried to "buy the rumor, sell the news," well, it appears that strategy scored them a big, fat zero no matter which way they came at the deal.

Now what

That's the bad news -- but here's the good news for long-term investors: The upshot of this M&A hullabaloo is that two high-quality stocks now cost notably less than they cost a week ago.

Pinterest shares are trading at less than 15 times sales, and Pinterest stock is going for less than 13 times sales. Both companies are solidly profitable, with Pinterest earning more than $161 million in net profit over the past year and PayPal earning $4.9 billion. Earnings quality is high at both companies as well, with PayPal's $4.8 billion in positive free cash flow backing up $0.98 of every dollar of reported income. Pinterest's free cash flow is actually more than twice its reported income.

Long-term investors might want to look at Monday's sell-off as a buying opportunity. Based on the morning's price moves, it appears that this is exactly what PayPal buyers are doing. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why PayPal stock popped On Monday appeared first on The Motley Fool Australia.