Paysafe (PSFE) provides app-based personal banking and payment solutions. I am bullish on the stock.
The way that people save and pay money in the digital age is changing quickly.
Paysafe seeks to revolutionize these processes through technology, and ultimately pose a serious threat to traditional banking firms.
It’s an intriguing business model as millennials and Gen Z now control vast sums of money. Perhaps these younger generations can help Paysafe in its question to transform banking as we know it.
However, investing in Paysafe hasn’t been easy or particularly profitable. So, let’s chart the path of PSFE stock now, and see if there’s any potential for a turnaround. (See Analysts’ Top Stocks on TipRanks)
A Quick Look at PSFE Stock
Suffice it to say that 2021 has been a horrific year for owners of Paysafe stock.
After peaking at $19.56 in January, it was all downhill from there. Through the end of November, there were hardly any buy-able dips, not to mention sustained rallies.
August was particularly awful as PSFE stock broke below the key $10 level. As if that weren’t bad enough, the share price got cut in half in November, plunging from $8 to $4.
By the first day of December, the Paysafe share price had slid to $3.44.
Momentum-focused traders probably will want to stay away, but bold contrarian investors might see a prime bargain here if they believe in Paysafe’s future as a payments-space disruptor.
Not So Bad, After All
As we just discussed, the PSFE stock price was halved in November. Much of this downtrend occurred in the wake of Paysafe’s third-quarter 2021 earnings report.
Now, the rout in Paysafe stock might lead you to believe that the company had its worst quarter ever.
Yet, informed investors mustn’t assume anything. So, let’s see what the actual data tells us.
Was Paysafe’s total payment volume — an important metric for the company — disappointing? Not at all, as it totaled $31.1 billion, marking a 19% year-over-year increase.
What about the quarterly revenues? They weren’t too horrible, as the third-quarter revenues of $353.6 million only indicated a 1% year-over-year decrease.
Furthermore, Paysafe’s quarterly adjusted EBITDA of $106.4 million also signified a decrease of 1% on a year-over-year basis.
This Cut Won’t Hurt Too Much
While those results weren’t stellar, they weren’t horrible, either.
Surely, they shouldn’t justify PSFE stock getting a 50% haircut in November.
Still, it’s not unusual for analysts to reduce their price targets on a stock after it has lost substantial value.
Hence, Susquehanna’s price-target cut from $17 to $13 on Paysafe stock shouldn’t come as a huge surprise. Moreover, it’s still significantly higher than the current share price.
Plus, Susquehanna analyst James Friedman seemed to suggest that Paysafe’s challenges, as indicated in the company’s earnings report, have already been priced into PSFE stock.
“[T]hese are already discounted in the sharp selloff in the shares,” Friedman commented.
So perhaps, despite the price-target cut, Susquehanna is still willing to recommend PSFE stock to patient investors.
“You have to give it [Paysafe] some time,” Friedman advised.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, PSFE is a Hold, based on one Buy and four Hold ratings. The average Paysafe price target is $5.10, implying 40.9% upside potential.
The Takeaway
PSFE stock will likely continue to be volatile and may lose more of its value.
That being said, contrarians should perk up at the thought of owning a super-cheap stake in a category disruptor.
In the final analysis, Paysafe’s financials aren’t too terrible, and the reduced share price appears to be the result of a severe overreaction.
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