Payment solutions provider Paysafe (NYSE:PSFE) demonstrated high volatility over the last two days of trading. The company lost 10.46% in Monday’s trading and is now down 2% today despite being up 4% in pre-market trading. Big percentage moves can be expected with a company whose share price measures in the single digits. The latest moves seem connected to a new study the company released that shows that the number of businesses that run into issues at checkout is climbing.
Last year’s survey discovered that 43% of businesses found customers were having trouble at checkout. This year, it’s up to 52%.
Going into a difficult holiday shopping season this year, Paysafe might have been able to make some headway with this report. If nothing else, it might be able to set up some wins in the future. Best of all, with PSFE stock down 62% this year, its future downside may be limited. I’m bullish on Paysafe stock.
Is PSFE a Good Stock to Buy, According to Analysts?
Turning to Wall Street, Paysafe has a Hold consensus rating. That’s based on one Buy, two Holds, and one Sell assigned in the past three months. The average Paysafe price target of $3.14 implies 133.5% upside potential. Analyst price targets range from a low of $1.55 per share to a high of $6 per share.
Also, Paysafe has a Smart Score of 3 out of 10 on TipRanks, suggesting that the company has a better chance than most to lag the broader market.
As for the company’s financials, those are a bit mixed right now. Perhaps the most distressing point is Paysafe’s P/E ratio, which currently sits at -0.65.
The company’s gross profit has been in open decline since December 2021, going from $223.55 million in December 2021 to $220.56 million in March 2022. It dropped again in June to $219.93 million, and in September, it fell once more to $214.18 million.
Setting Up the Next Generation of Sales
While right now, the numbers and the sentiment figures aren’t giving Paysafe much help, there is at least one potential win coming up for the company. The study Paysafe released should prove a significant help in its marketing operations.
It might be too late now to get Paysafe systems in place for retailers. However, Paysafe may be in a good position to set itself up for future wins.
We’ve heard several distressing studies already that suggest the 2022 holiday shopping season might be a bit of a bust. Since holiday shopping can account for nearly a third of all sales, that makes this season particularly crucial for retailers.
Shoppers have made it clear they expect to spend roughly what they did last year—about $507, up just $6 from last year—but they expect to get less for their purchases. The National Retail Federation brought out a much more optimistic forecast: a gain of between 6% and 8%.
Still, November consumer confidence figures were clearly down. The Economic Optimism Index from IBD/TIPP slipped from 41.6 in October to 40.4 in November.
What this adds up to is an environment where businesses will be struggling to land every nickel they can get out of the concerned and wary holiday shopper. That means removing as many stumbling blocks as possible, and Paysafe’s study just identified a doozy.
It’s hard enough to get customers to the checkout in an online shop; I’ve had items in my Amazon (NASDAQ:AMZN) cart for the last couple of weeks now. Consider how hard it is to get them to release the death clutch they’ve got on their wallets and pull the trigger on purchases. To lose out on that psychological ramping-up through a glitch at the checkout is even worse.
Paysafe can make an excellent case for its future sales by simply sticking to its study. Businesses need every penny of sales they can generate.
Turning to Paysafe could be the way to get those sales. If Paysafe can make that point clear, then it can create and relieve its own huge new pain point for businesses.
Conclusion: Lots of Upside Potential
Granted, the numbers are not supporting this company. Even tiny fluctuations in price send it on a rocket sled of volatility. However, the company is currently trading well under its lowest price targets. Even getting back to the average requires Paysafe to more than double its current share price. The study it released, meanwhile, might be the catalyst for such a win. If not this year, then potentially next year. Businesses will want to keep their customers buying. Eliminating issues at checkout will go a long way toward keeping that business.
Paysafe may have the necessary secret sauce to keep those shoppers shopping, and that’s why I’m bullish on this little dark horse.
