In a potential game changer for enterprising investors, Foley Trasimene Acquisition II (NYSE:BFT) announced that it’s planning a special purpose acquisition company (SPAC) merger with integrated payments platform Paysafe. In anticipation of the merger’s closing, traders can now buy shares of BFT stock.
As InvestorPlace contributor William White reports, if nothing goes awry, then the SPAC merger is expected to close during the first quarter of 2021. White’s article is highly recommended as it provides a convenient primer on the Foley Trasimene-Paysafe merger.
With a pro-forma enterprise value of around $9 billion, the Paysafe merger is bound to make a big splash when the deal is finalized. Thus, it’s safe to say that the Foley Trasimene-Paysafe merger will be among the most buzz-worthy market events of early 2021.
We’ve seen red-hot post-merger SPAC stocks fly high in 2020. So, can BFT stock holders expect life-changing returns on their investment? That’s the billion-dollar question, so let’s begin with a summary of the price action of this fast-moving stock.
A Closer Look at BFT Stock
It’s not uncommon for stocks representing shell companies to move sideways for a long time. Why does this happen? Mainly, it’s because the market is waiting to find out which company will be the acquisition target.
And so, throughout October and November, BFT stock didn’t stray too far from the $10 level. In hindsight, we could say that the stock was taxiing down the runway. Soon enough, the plane would take off.
The announcement of the Foley Trasimene-Paysafe merger was released on Dec. 7. Without a doubt, that event caused to BFT stock to rocket higher. Within a day, the stock was above $12.
Yet, that was just the beginning. By Dec. 14, BFT stock was nearly $15, and by Dec. 28, it was close to $17. However, the BFT share price retraced to $15.10 at the end of the year.
The range of $9.60 to $17 in 2020 should give you an indication of how excited the market is about the SPAC merger. Still, a dose of skepticism is not unnatural here. What’s so special about Paysafe, anyway?
Know What You Own
When the merger deal goes through, the combined company will officially be called Paysafe and will trade on the New York Stock Exchange under the ticker symbol PSFE.
Hence, if you’re going to own BFT stock now, don’t consider it an investment in Foley Trasimene. Instead, think of yourself as an investor in Paysafe.
It’s important to “know what you own,” as market commentators often say. But what is Paysafe’s business model and value proposition?
I could simply say that Paysafe is an e-commerce and/or payments platform, but that’s not an adequate description. Paysafe CEO Philip McHugh has a much better description as he points out the platform’s “industry-leading payment processing, digital wallet, and online cash solutions.”
Room for Growth
That’s a good start, but let’s dig a little deeper. Operating through brands including Income Access, Paysafecard and Skrill, Paysafe enables businesses to accept credit cards and facilitates cash and direct-debit transfers online.
Furthermore, Paysafe offers prepaid cards and digital wallets. In a time that could accurately be called the era of e-commerce dominance, Paysafe is truly a right-place, right-time company to invest in.
In Foley Trasimene’s press release, it was reported that Paysafe’s integrated payments platform processed nearly $100 billion of payment volume.
Meanwhile, the last time I checked, BFT stock only had a market capitalization of $2.77 billion. It certainly appears, then, that there’s room for growth as a stake in Foley Trasimene transitions into a high-potential e-commerce investment in Paysafe.
The Bottom Line
Investors should expect Paysafe to make a big splash when the company officially starts trading on the market.
In the meantime, traders can take a still-early stake in BFT stock as Paysafe is poised to grow amid the era of e-commerce dominance.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
