Paysafe (PSFE) has made a name for itself as a specialized payments provider. That status recently drew the attention of a New York gaming operation, and produced a new client as a result.
This is just the latest in a growing string of moves Paysafe has made in the last few weeks. The growth, coupled with Paysafe's attractive pricing right now, makes me bullish on the company going forward.
Paysafe's last 12 months are a study in decline. Back in April 2021, the company was up around $16 per share. Ever since, it's been mainly in decline with only slight stabs at recovery.
The biggest hammerblow to Paysafe came last November, when the company lost nearly 50% of its already-declined value, going from around $7.27 to around $4.24 in just one trading day.
The latest news should put new life in the company. It's established a partnership with Resorts WorldBET, the mobile sports betting operation for Resorts World New York.
This allows Paysafe to handle payments for sports betting at both Resorts World New York City and Resorts World Catskills. This is just the latest sports betting operation that Paysafe counts as a client. It's worked with several other firms since the market became available in January.
Wall Street's Take
Turning to Wall Street, Paysafe has a Moderate Buy consensus rating. That's based on four Buys, two Holds, and one Sell assigned in the past three months. The average Paysafe price target of $5.75 implies 60.2% upside potential.
Analyst price targets range from a low of $3.50 per share to a high of $9 per share.
Lack of Dividend and Hedge Fund Support
As interesting as Paysafe's prospects seem, there's a marked lack of support for the company on two key sectors. First, its dividend. Paysafe's dividend history is noticeably lacking, in that it has no dividend history to speak of.
Perhaps more distressing is the hedge fund situation. The TipRanks 13-F Tracker reveals that hedge fund holdings of Paysafe are on the decline. There was a significant uptick in the amount of Paysafe held between July and October 2021.
That uptick didn't hold into the new year, though, as hedge funds cut roughly half of their holdings out of the picture by January 2022. In fact, the hedge fund departure came just weeks before the big November drop.
Looking for a Comeback
Paysafe has been laying the groundwork for a comeback for the last several weeks. About two weeks ago, Paysafe turned to J.P. Morgan as its core banking partner. This gives Paysafe room to offer more options to potential customers.
Given that we've already seen new interest in Paysafe, being able to offer more services should go quite a ways toward bringing them in and keeping them paying Paysafe.
It's also making clear inroads in the online gaming sector. Previously, the company announced deals with Bally, Hard Rock Online Casino New Jersey, and Wildwood Casino in Colorado.
It's easy to be concerned about the company's lack of a dividend. It's also easy to be unnerved by the huge drop the company's endured over the last year. Watching the hedge fund retreat is also gravely unsettling.
However, looking at the price targets currently on the company suggests plenty of upside potential. When potential investors can buy a hundred shares for the price of a used laptop, it's a good speculation possibility. It won't do for income investors at all.
For growth investors, however, the company has little room to go anywhere but up. A recovery to last March's levels would represent a three-fold increase.
Concluding Views
Just looking at the overall picture for Paysafe suggests that its worst days are behind it. Another three-quarter loss would send Paysafe tumbling into penny stock territory. The stock is attractively priced at present. It's also adding new customers with surprising regularity.
Better, as online sports betting catches on throughout the U.S., Paysafe has a great chance of catching on further itself. It has a solid book of business that should help it draw more business as it moves forward.
An attractively priced stock with growing customer interest in a market that is itself growing adds up to pretty good news for Paysafe.
It's also good news for Paysafe investors, who have little other way to go but up with this company.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
