- Paysafe (PSFE) stock might trap some traders with short-term upward price movements.
- The long-term trend is still to the downside, and Paysafe’s financials aren’t reassuring.
- Investors can simply choose to avoid investing in PSFE stock altogether.
Bermuda-headquartered Paysafe (NYSE:PSFE) debuted for public trading on March 31, 2021 after completing its special purpose acquisition company (SPAC) merger with Foley Trasimene Acquisition II. A year later, we can see the performance of PSFE stock, and many investors are undoubtedly disappointed.
Apparently, jumping into an already-crowded digital payments space hasn’t paid off for Paysafe and its shareholders. There’s an abundance of competition from large financial institutions, which have much greater capital and human resources at their disposal.
Still, some folks might be tempted to go on a bottom-fishing expedition, as PSFE stock will make small upward movements from time to time. However, it would be hasty to jump into the trade, as Paysafe’s financials don’t justify a long-term position in 2022.
What’s Happening with PSFE Stock?
Post-SPAC-announcement, PSFE stock vaulted to $19.57 on Jan. 21, 2021. That turned out to be its peak price.
Since that time, the Paysafe share price has had little rallies along the way, but they didn’t last long. However, with the recent price bump from $2.75 to $3.50, Paysafe’s investors are undoubtedly hoping for a major turnaround.
They might be forgetting a tried-and-true principle, though. Specifically, the trend is your friend until proven otherwise — and the year-long trend definitely isn’t PSFE stock’s friend.
Even after a series of acquisitions, Paysafe just can’t seem to get on the right track. For example, in March 2021, it completed its purchase of International Card Services and finalized its acquisition of Orbis Ventures S.A.C. In August 2021, Paysafe entered into separate definitive agreements to acquire SaftPay and ViaFintech.
Keep in mind, buying one company after another is an expensive habit. Stocks don’t deserve to go up simply because a company is making purchases of other businesses.
Breaking Down the Financials
Also, the bump in PSFE stock should remind investors that stocks don’t just go straight down. Even in a confirmed downtrend, there will be little run-ups along the way, but they aren’t always meaningful.
Furthermore, a long-term rally will be difficult to sustain if Paysafe’s financials aren’t showing enough improvement. Consider that the company’s total revenue increased by only 0.4% from the fourth quarter of 2020 to 2021’s fourth quarter.
That’s what you might call a flat result. It’s nothing to write home about. Moreover, during that same time frame, revenue from Paysafe’s Digital Commerce segment — a significant part of the company’s business model — actually decreased by 6.2%.
Now, we can step back and look at the bigger picture. During full-year 2020, Paysafe incurred a net earnings loss of $126.7 million. It didn’t improve much a year later, as Paysafe posted a $110.9 million loss for full-year 2021.
Those are huge bottom-line losses, and we’re not talking about a massive corporation that can easily absorb losses like those.
Going forward, Paysafe still has to compete against well-established financial giants that aren’t necessarily losing more money than they’re making. It might try to grow and succeed through acquisitions, but so far, that plan doesn’t seem to be working out too well.
What You Can Do Now With PSFE Stock
You don’t have to be enticed into buying PSFE stock on every little rally. These are normal fluctuations and aren’t always meaningful in the bigger picture.
Instead, you can choose to allocate your capital elsewhere, or just save it for better future opportunities. With financial figures that don’t show enough improvement (and sometimes no improvement at all), PSFE stock just isn’t safe for investors now.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
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.