After merging with special purpose acquisition company (SPAC) Foley Trasimene Acquisition II, Paysafe (NYSE:PSFE) made its debut on the New York Stock Exchange on March 31. It was a major market event as many traders were eager to buy PSFE stock.
The merger deal grabbed the financial press’s attention as the transaction, at its closing, reflected an implied pro-forma enterprise value of roughly $9 billion.
But PSFE stock didn’t shoot to the moon after March 31. If anything, it just delivered a big “nothing burger.”
It just goes to show that the hype over special purpose acquisition company (SPAC) stocks may have been excessive. Still, there’s something notable about Paysafe — a connection with an e-commerce giant and cloud platform provider — which should offer encouragement to the investors.
A Closer Look at PSFE Stock
In the fourth quarter of 2020, PSFE stock didn’t exist yet, but there was BFT stock, which represented Foley Trasimene Acquisition Corp. II. At that time, the share price was close to $10.
However, a share-price ramp-up began in December and continued into January of 2021. On Jan. 25, the stock topped out at a 52-week high of $19.57.
SPAC mania was in full effect, but it wasn’t meant to last forever. Thus, BFT/PSFE stock embarked on a multi-month decline, much to the investors’ chagrin.
By May 10, the stock had fallen to $13.57 and it seemed like the buyers were taking a vacation. So, does this mean that the situation is hopeless for the shareholders?
Not necessarily. Even if SPAC mania has come and gone, there are still reasons to be bullish on Paysafe, and therefore on PSFE stock.
A Real Accelerator
Paysafe is known as a premier digital processor of payments and related merchant services.
Philip McHugh, the CEO of Paysafe, observed that the onset of the Covid-19 pandemic has provided a tailwind to his company’s business.
Covid-19 “has been a real accelerator in the adoption of alternative payment methods,” McHugh explained. “Consumers have adapted and gotten to grips with alternative payment methods over the last year, partly because they had to due to the pandemic.”
This isn’t just a theory, as Paysafe has the numbers to back up McHugh’s assertions.
Research recently conducted on behalf of Paysafe revealed some eye-opening shifts in consumers’ spending patterns:
- 86% said their payments habits have changed since the start of the Covid-19 pandemic
- 59% tried a new payment method for the first time
- Among the 18-to-24-year-old age group, 77% tried a new payment method for the first time
- 31% are now more likely to use an alternative payment method (other than credit or debit cards) when making an online purchase
- 32% of consumers globally are using digital wallets more frequently than they did prior to the Covid-19 pandemic
Transitioning to the Cloud
As you can see, there’s merit to McHugh’s claims regarding consumers adapting to alternative payment methods.
That’s great news for Paysafe and the company’s stakeholders. Plus, there’s something else for the investors to celebrate.
A global, multi-year agreement with Amazon Web Services (AWS) will reportedly enable Paysafe to migrate practically all of its major services to the cloud.
These services will include Skrill, paysafecard, Paysafecash, NETELLER and eCash solutions.
The eCash solutions have already been migrated to the cloud, so that first milestone has already been completed.
Cloud-based transactions offer the potential for enhanced ease, speed and connectivity.
Moreover, as the press release points out, “The real-time transactional processing powered by AWS will allow merchants to offer a frictionless customer experience at the point of sale.”
The Bottom Line
Hopefully, the aforementioned shifts in consumer spending patterns, along with an Amazon-facilitated cloud migration, will lift the spirits of downtrodden PSFE stockholders.
They might have to eat a “nothing burger” for the time being, but some delicious profits should be on the menu in short order.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.