Perhaps, like many people, you believe that technology-enabled personal finance has a future. With that belief in mind, you might be bullish on Paysafe (NYSE:PSFE) — and you may even be considering a long position in PSFE stock.
Or, maybe you’re a bargain hunter and Paysafe is on your radar. Surely, there couldn’t be anything wrong with picking up shares of a cheap tech stock. Right?
Before you jump into the trade, however, think twice. As the old Warren Buffett and Benjamin Graham saying goes, price is what you pay but value is what you get.
It’s hard to find value in a company that’s not successful, especially when the financial data is largely negative. Therefore, it’s not a bad idea to look under the hood here. Paysafe’s value proposition is lacking, even while the share price is low.
PSFE Stock at a Glance
This whole ordeal started when Paysafe debuted for public trading on Mar. 30, 2021 after completing its special purpose acquisition company (SPAC) merger with Foley Trasimene Acquisition II.
Unfortunately, the price history of PSFE stock involves a great deal of pain and suffering. The stock started off at around $15, but relentlessly went downhill thereafter.
By Nov. 10, the share price had already declined to $7 and change. Then, a bombshell dropped — which we will discuss momentarily — and the selling pressure only intensified.
Checking in on Jan. 11, 2022, PSFE stock was slightly below $4. If the trend is your friend, then this stock is among the unfriendliest picks on the New York Stock Exchange. Just to put this into perspective, the S&P 500 gained roughly 27% in 2021. Over the same period, Paysafe’s share price fell more than 74%.
Loss and Grief in Q3
No matter how bad a company’s results may be, there’s always a way that eternal optimists can give them a positive spin. Take Paysafe’s third-quarter 2021 financial results, for example. We could cherry-pick one data point — Paysafe’s quarterly revenue — and claim that the fiscal situation behind PSFE stock isn’t too bad.
Indeed, Q3 2021 revenue of $353.6 million isn’t much worse than $355.5 million in revenue for the prior-year period. On the other hand, though, there’s the bottom-line results. In Q3, the company sustained a net earnings loss of $147.2 million. That’s substantially worse than the prior-year period’s loss of $38.1 million.
No doubt, Paysafe’s subpar performance in its digital wallet business contributed a lot to this grievous result. As it turns out, that segment’s revenues declined 15% year-over-year (YOY) during the third quarter.
In part, the company also blamed its poor fiscal performance on “the exit of certain clients in the direct marketing vertical within the Integrated Processing segment, which had an unfavorable impact on growth.”
Disappointment Sets In
That quote might give the impression that Paysafe is blaming clients for its financial woes.
Maybe Paysafe is playing the blame game, maybe it’s not. Either way, CFO Izzy Dawood apparently wasn’t willing to downplay the underperformance. “Overall, there is no sugar coating that our financial results are disappointing and not up to our expectations,” Dawood acknowledged during the Q3 conference call.
Guidance further suggests that full-year 2021 performance has indeed been “disappointing,” though. For the year, Paysafe expects revenue of between $1.47 billion and $1.48 billion in 2021, down from previous guidance of between $1.53 billion and $1.55 billion. Furthermore, the company revised its 2021 adjusted EBIDTA estimate from the $480 million to $495 million range to between $425 million and $435 million.
Finally, the company’s Q4 expectation of between $355 million and $365 million in revenue doesn’t seem to have inspired much confidence for PSFE stock on Wall Street. Reportedly, analysts tracked by FactSet were expecting $418 million in Q4 revenue.
The Takeaway on PSFE Stock
It’s difficult to maintain confidence in Paysafe when the company itself is downbeat in its financial projections.
Bottom fishers may be tempted to pick up PSFE stock shares simply because the price has declined. However, prospective investors should know the difference between price and value.
So far, Paysafe has yet to prove that it represents the future of personal finance. And this might never be proven — especially if the company continues to disappoint its stakeholders.
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On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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