Paysafe stock forecast: how safe is its future?
After a complicated history of mergers and acquisitions, Paysafe (PSFE) touts itself to be a one-point solution for businesses and consumers for online payments. This former FTSE 250 Index constituent was acquired for $3.9bn by an alliance between The Blackstone Group and CVC Capital Partners in December 2017. As of 31 March 2021, after a $9bn merger with the special purpose acquisition company (SPAC) Foley Trasimene Acquisition Corp II, the company is listed on the New York Stock Exchange (NYSE).
Paysafe’s offerings range from online to in-store payments and alternative payments to omnichannel transfers. It also boasts of subsidiary brands under its corporate umbrella, the most notable of them being Skrill, Neteller, Paysafecash and Paycard.
The company debuted on the NYSE at $13.50 per share price and reached a record low of $3.18 on 6 December, a 76% drop from its debut price.
After third quarter results fell short of the company’s estimates, Paysafe lowered its performance targets of earnings, revenues and gross profits for the full year of 2021. In this article, we judge the Paysafe stock potential for the times to come. As the company navigates the market, after its Q3 financial results, join us as we perform a Paysafe stock analysis and catch up on recent news.
Paysafe stock fundamental analysis
The company recorded a net loss of $147.2m when it published its Q3 2021 results on 11 November. Philip McHugh, CEO of Paysafe, mentioned that while the reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) was in line with the company’s expectations, it missed out on the target ranges for its revenue and gross profits.
Third quarter adjusted EBITDA was reported at $106.4m. While this was a 0.82% decrease from the Q3 2020 figure of $107.3m, it was well within the anticipated Q3 range of $95m to $110m.
The revenue reported for the three months ended 30 September 2021 stood at $353.6m, approximately a 0.54% decrease from its Q3 2020 result of $355.5m. The sale of Pay Later, the deferred payments arm of the Paysafe group, to Germany-based PSP Unzer, the Paysafe group took a hit of approximately $7.7m.
The company mentioned in the report that its Digital Wallet segment fell short of the performance expectations set out for it. Stricter gambling regulations and softness in key European markets drove the unit’s growth trend downwards. At a revenue level of $83.7m on 30 September 2021, it generated 15.1% less than its 2020 figure of $98.5m.
In its supplemental presentation to the press release of Q3 2021, Paysafe reiterated its strategy on addressing challenges that have hindered its performance in the quarter. However, it also made some revisions to its year-end growth and profitability numbers to stay realistic about its key targets.
Paysafe downgraded its full-year adjusted EBITDA guidance to a range of $425m to $435m, which is a steep reduction of $60m from its earlier anticipated higher range of $495m.
Full-year revenue expectations now sit at $1.47bn to $1.48bn, which translates into a $70m downgrade from its earlier higher revenue target of $1.55bn. And lastly, it expects the gross profits (excluding depreciation and amortisation) to be in the range of $870m to $880m, a $90m reduction from its earlier anticipated higher range of $970m.
Paysafe share price news
Factoring in the reduced Q4 and year-end financial estimates from the company, investors’ confidence remains shaky about the stock’s prospects. After the Q3 2021 results were made public, investors participated in massive selling of the stock resulting in a huge volume jump to 258 million shares compared to 11.9 million the day before. The share price fell by 41.67%. This reduction in share price, from $7.27 to $4.24, came as a huge hit to the stock and it hasn’t recovered since.
Earlier this month, through its alternate payment business viafintech GmbH, Paysafe announced a partnership with Europe’s leading fintech company Solarisbank. With the merger, the companies aim to replace the traditional mode of bank branches and eliminate the need for physical locations for conducting basic banking services. This coming together of the companies would result in over 20,000 acceptance points for cash deposits and withdrawals for Solarisbank’s end customers.
Managing director and co-founder of viafintech GmbH at Paysafe, Sebastian Seifert, called this partnership a means to expanding their expertise and services, to a larger group of companies and their end customers across the European markets.
In the latest Paysafe stock news, on 8 December 2021, the stock made double-digit gains since its last close price following an announcement that CEO Philip McHugh had purchased 290,000 shares of the common stock for approximately $1m, investors’ spirits picked up. The share price increased from $3.64 to $4.28; an impressive one-day rally of 17.58%.
In addition to the CEO, many other top-level executives of the company and independent board members purchased 447,000 shares for a total purchase price of $1.8m. Such significant internal purchases usually hint at a bullish view of the stock by insiders, and is potentially being undervalued at current levels. Whether this holds for Paysafe or the upward adjustment to its stock price will be short-lived remains to be seen in the coming days. Almost a week since this news, the stock is currently trading at $3.77 which is approximately 12% down from the $4.28 high.
Paysafe future price forecast
Several analysts have revised their Paysafe stock price prediction following the company’s Q3 results and subsequent earnings revisions.
Cowen & Co. analyst, George Mihalos, reduced the price target to $7 from $14 and downgraded the stock to ‘market perform’ from ‘outperform’.
Timothy Chiodo, an analyst with Credit Suisse analyst, lowered the Paysafe price target to $4 from $9. He continued to reiterate a neutral rating on the stock.
Milan Vaishnav, CMT, MSTA, a consulting technical analyst at Gemstone Equity Research & Advisory Services, shared a technical analysis for Paysafe: “The stock is in a secular downtrend ever since it marked its high at 17.25. The prices are under a secular decline, and are presently in a falling channel. However, the most recent price action suggests that the stock may now attempt to form a base between the 3.18 and 3.90 range. On the daily chart, the relative strength index (RSI) has crossed above 30 from the oversold territory which is bullish. MACD and PPO remain positive. On the weekly charts, RSI still remains in the oversold territory.
Even algorithm-based forecasting service Wallet Investor, which usually provides five-year price targets for stocks, does not offer a Paysafe stock prediction for 2022 to 2025. Wallet Investor is bearish on Paysafe. According to its forecast, the Paysafe share price could drop substantially to 0.006 by May 2022.
However, analyst predictions compiled by TipRanks were more encouraging, with the consensus target for the 12-month share price at $5.38 per share. The stock projection varied from the low of $4 to the high of $7. The average price target represents a 42.71% upside change from the last price of $3.77.
As of 14 December 2021, out of the five Wall Street analysts, four rated the Paysafe stock as ‘hold’ and only one recommended ‘buy’.
When looking for Paysafe stock buy, sell or hold recommendations, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ snap stock predictions are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.
Is Paysafe a good stock to buy?
Answer: Whether the Paysafe stock is a suitable investment depends on your investment objectives – and the opinion based on your own research. Remember, it’s important to reach your own conclusion of the company’s prospects and the likelihood of achieving analysts’ targets.
Will Paysafe stock go up or down?
Paysafe share price forecasts vary from a low of $4 to a high of $7, with the average price targets sitting at $5.38, based on five Wall Street analysts’ views compiled by TipRanks. At the time of writing, on 14 December 2021, the stock price is at $3.76.
Note that predictions can be wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.