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Optimists Toward PSFE Stock Have Left the Building … Should You?

Optimists Toward PSFE Stock Have Left the Building ... Should You?
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Paysafe (NASDAQ:PSFE), a payments processor focused on gambling, was a bad gamble in 2021. The company, which is headquartered in London, went public last year through a special purpose acquisition firm formerly known as Foley Trasimene Acquisition II. Its value after the space was “removed” was $9 billion. PSFE stock entered the 2022 trade at $2.8 billion, down 73% from last year.

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The bulls fled after their third-quarter earnings, reported on November 11, proved unsustainable. A loss of $153 million, 21 cents a share, on revenue of $353 million, also gave rise to the Plaintiff’s Syndicate.

Class actions have been filed on behalf of the shareholders.

PSFE stock: is there reason to believe?

If PaySafe can deliver on its promise, it’s now really cheap stock. You only pay twice the revenue for the payment processor with a focus on the fast growing online gaming segment.

The management still believes in him. CEO Philip McHugh and his executive team bought $2.8 million in stock during the November defeat. The news sent shares up 16% when it was announced.

However, no one else believes in the PSFE stock. Only five analysts are still following it, and most of them are waiting for the news. Negative news makes it risky. This was the consensus recently reached by Stavros Gorgadis.

Did Foley’s touch fail?

Foley who brought Paysafe to the public is Bill Foley. He also holds the position of Chairman of the Board of Directors Dan and Brad Street (New York Stock Exchange:DNB) and make his money in fintech like black knight (New York Stock Exchange:BKI). Foley also owns the Las Vegas Golden Knights hockey club.

The promise when Paysafe was introduced to the public was in Europe and Latin America, where Paysafe was expanding its alternative payment business. This is the problem, too. The epidemic continues to hit these regions hard. It is the United States that dominates the global economy today, perhaps as never before.

While Paysafe’s eCash business is growing, at a rate of 10% annually, the digital wallet business is declining faster. These businesses are done under the names Skrill and Neteller. These wallets also support a range of cryptocurrencies.

Since August, Chirag Patel has been running the digital wallet business. recruited from Santander Group (New York Stock Exchange:San), the Spanish banking giant, where he was the head of the payments department.

out of fashion

Besides focusing on troubled international operations, Paysafe is also a payment processor. Until recently this was a hot market. Now it’s cold.

processors like Fidelity National Information Services (New York Stock Exchange:FIS) And viserve (NASDAQ:FISV) Outdated. Chamath Palihapitiya, once king of SPACs, now says wizards like Visa (New York Stock Exchange:Fifth) And Master Card Credit Card (New York Stock Exchange:MA) to the trash in 2022, to be replaced by Web3-based crypto projects.

When I wrote hopefully about Paysafe in September, my argument centered on the promise of online gambling, and the hope that an existing processor would be able to purchase Paysafe. With gambling continuing into the future, and wizards unsettled on their backs, this doesn’t seem like a good argument.

bottom line

The PSFE stock at the moment is just a guess.

It is cheap compared to other payment processors. If online gambling takes off in the US, if we get past the pandemic, there is real business here. Paysafe engaged in $31.1 billion in online payments in the third quarter alone, and this segment of the business continues to grow.

The reward risk on this stock is skewed towards risky at the moment, but there is still hope in the work. I wouldn’t put any money in it that I can’t afford to lose. But compared to a lot of junk floating around the market today, it might be worth the risk for investors with athletic blood.

At the date of publication, Dana Blankenhorn did not (directly or indirectly) hold any positions in the securities mentioned in this article.. The opinions expressed in this article are those of the author, subject to InvestorPlace.com. Posting Guidelines.

Dana BlankenhornHe has been working as a financial journalist since 1978. His most recent publication isThe Big Bang of Technology: Yesterday, Today, and Tomorrow with Moore’s Law, articles about technology available on the Amazon Kindle Store. Follow him on Twitter atTweet embed.

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