This is the first time I’m writing about one of the hottest special purpose acquisition company stocks of 2021. Foley Trasimene Acquisition II Corp. (NYSE:BFT) is bringing the integrated payment platform Paysafe public via a reverse merger. But since the announcement of the merger in December, it’s been choppy waters for BFT stock.
Paysafe expects to have tremendous growth potential because of its place in the online payment processing universe. Specifically, the company is using the SPAC to ramp up the e-commerce and iGaming aspects of its services.
Of the two of these, the iGaming represents the largest immediate opportunity for the company.
A Sure Bet
First, it’s common knowledge that several states are eyeing ballot initiatives to legalize online sportsbooks. Budget shortfalls made worse by the Covid-19 pandemic are making these moves a matter of economic survival.
As InvestorPlace’s Vince Martin points out, Paysafe is the exclusive online payment processor for DraftKings (NASDAQ:DKNG) in the United Kingdom. Plus, Bill Foley, the legendary investor who runs the SPAC (and will be chairman of the board of the new entity) is a co-owner of the National Hockey League’s Las Vegas Golden Nights. It’s logical to believe that several individual teams or even whole professional sports leagues may carve out a relationship with Paysafe.
And according to Grand View Research, the online gambling market may reach as high as $102.97 billion by 2025 with a compound annual growth rate of 11.5%.
E-commerce Has More Competition
The other catalyst for Paysafe is its network of online and in-store payment processing. It’s a part of the economic dogma that e-commerce will likely continue to surge even after the pandemic ends. Some shopping habits will not go back to the way they were. And bullish analysts are saying that pent-up demand for in-store shopping will also work to Paysafe’s benefit.
However, this is a competitive space. One bullish thought is that Paysafe will reach the customers without bank accounts better than one of its largest competitors, PayPal (NASDAQ:PYPL). But that is where you have to be careful.
One of the many things I like about PayPal is that it doesn’t rest on its laurels. In fact, one area that I highlighted about a year ago was the company’s push into serving unbanked or underbanked customers.
Via the PayPal Cash card, which is similar to the Paysafecash card, consumer without a bank account can fund a card from their PayPal account. PayPal also offers a traditional debit card as well as a credit card. In short, PayPal gives its traditional users fewer reasons to need their traditional bank. The company offers solutions that make everything from paying rent and utilities to all forms of e-commerce seamless.
Understand Your Investment in BFT Stock
Paysafe’s deal with DraftKings is a huge feather in the company’s hat and should not be easily dismissed. At the same time, it’s fair to wonder if that’s enough. The iGaming trend is only going to increase. But it’s also likely that PayPal and/or Square (NYSE:SQ) will continue to be part of the conversation.
If you’re investing in the Foley Trasimene Acquisition Corp II SPAC, you should be calculating that there’s room for more payment processors. And there most likely will be. However, it’s important to remember that Paysafe is not carving out a unique space all to itself. If you’re clear-eyed enough to see that, BFT stock becomes a question of picking your price.
For me, I’ll want to see what happens after the merger closes which is supposed to be sometime in the first half of this year. And the lockup period may end after just 90 days.
In other words, there’s a lot to digest with Paysafe, and the story has to be taken into context the competition that already exists. BFT stock may have much higher to go, but it may not be a smooth ride to get there.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.