It’s almost inexplicable, as the news has largely been positive for Paysafe. Maybe the stock’s price decline could be explained by the investing community’s waning enthusiasm for special purpose acquisition companies (SPAC’s).
If SPAC fatigue is the primary reason for PSFE stock’s drop, then I’d say there’s an opportunity here.
Folks who’ve been patiently waiting for lower price points should consider taking a position now.
As we’ll see, PaySafe is gaining traction in a number of key verticals – and hopefully, the market will soon recognize the company’s true intrinsic value.
A Closer Look at PSFE Stock
Let’s rewind the clock a little bit. On March 31, Paysafe made its debut on the New York Stock Exchange after having completed its reverse merger with shell company Foley Trasimene Acquisition II.
The stock traded under the ticker symbol BFT prior to that. It stayed fairly close to the typical SPAC stock price of $10 until Dec. 7, 2020, when the announcement of Foley Trasimene’s proposed merger with Paysafe took place.
That announcement spurred a strong rally in BFT stock. Impressively, on Jan. 21, the stock reached a 52-week high of $19.57.
Unfortunately, the initial burst of post-deal-announcement enthusiasm faded after that. On the day in late March when the stock transitioned from BFT to PSFE, the share declined to $13.50.
By May 28, the stock was down to $11.22. I suppose that momentum-focused traders won’t appreciate the trajectory of the price action here.
On the other hand, value-oriented investors might see a rare opportunity. It all depends on your outlook for the company – and the fiscal data might provide a healthy dose of optimism.
Cashing In on eCash
In an increasingly digitized economy, PaySafe moved early and aggressively into the online payments space with eCash and the paysafecard.
There’s no need for a credit card or even a bank account here, as Paysafecard enables customers to pay with cash for their online purchases by entering a 16-digit code.
It’s a modern solution to the global problem of the “unbanked” – the people around the world who don’t have access to a bank account.
According to PaySafe, Paysafecard is available at 650,000+ points of sale in 50+ countries.
Apparently, the company is particularly focused on Paysafecard market opportunities in the areas of entertainment, apps, i-gaming and sports betting.
Given the company’s first-quarter 2021 fiscal data, it’s evident that PaySafe’s venture into eCash is paying off big-time.
During that quarter, PaySafe’s eCash Solutions segment revenues increased by a whopping 63% on a year-over-year basis, to $112.9 million (unaudited).
iGaming and Much More
Back in December, PaySafe claimed to have a “Long history as the global market leader in iGaming payments,” and to be “well-positioned to capitalize on the expanding US iGaming market.”
That’s a big claim to make, but it’s not just bragging.
As the first-quarter results show, PaySafe’s North American iGaming segment posted 66% year-over-year revenue growth.
Furthermore, the company is now live with iGaming in 15 U.S. states, and is expanding its presence “with exciting launches.”
These launches include PointsBet (OTCMKTS:PBTHF) and Parx Casino in Michigan, as well as PlayUp in Colorado.
On top of all that, PaySafe has key enhancements in the works, including prepaid services, along with upcoming pilots (such as Skrill Instant Funding) with major brands.
The Bottom Line
The quarterly results point to a company that’s capitalizing on strong momentum in the eCash and iGaming verticals.
Yet, the trading community’s sentiment has waned on PaySafe – which is perfectly fine, as informed investors can swoop in and pick up shares at a discount price now.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.