Paysafe (NYSE:PSFE) recently completed a reverse merger with SPAC company Foley Trasimene Acquisition Corp II. The combined company debuted on the NYSE on the 31st March. Since then, the stock has been trading relatively flat, only up 2% since listing. Paysafe offers payment solutions and merchant services similar to that offered by Square or Stripe Payments. The company has a strong 20 year history and generated $1.42 Billion in 2020. This article will breakdown everything investors need to know about Paysafe’s stock forecast for 2021 and beyond.
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What are analysts saying about Paysafe (NYSE:PSFE) stock?
Firstly, across the board of 3 Wallstreet analysts the average 12 month price target is $19 a share. This is an implied upside of 37% from the current trading price. The three analysts include Royal Bank of Canada, Wolfe Research and Compass Point which all listed a price target of $19 a share. All institutions have listed a Buy rating/Outperform rating which is a green light for shareholders.
Paysafe’s Revenue forecast for 2021 and beyond
In addition to the positive price targets, Paysafe have forecasted steady revenue growth over the next few years. Paysafe expect to generate $1.52 – $1.55 Billion in 2021, which represents a YOY growth of 8.6%. Furthermore, this growth is forecasted to continue into the near future with revenue expected to reach $1.71 Billion by 2022 and $1.8 Billion by 2023. The catalyst for the positive revenue outlook is the “Integrated Processing and eCash momentum” which continues to drive strong growth within the business and the wider market.
If we breakdown the revenue segments further, the integrated processing segment of the business is driving the most revenue (50% contribution of revenue in 2020). However, the integrated processing segment was the only main segment to decline in revenue YOY (3% decline). The eCash segment generated $333 million in 2020, which was the highest growing segment of the business (22% YOY). In addition, the Digital Wallet segment contributed $395 Million in annual revenue, an 8% YOY growth. From this breakdown, we can conclude the eCash business will likely be the fastest growing segment in the near future whilst the integrated processing remains the backbone of revenue.
Paysafe’s Financial Outlook
Firstly, it’s important to note the company is running at a net loss of $126 Million in 2020. To add to this, the companies net loss has actually widened by $16 Million YOY or 12.6% compared to 2019. The company is yet to release any guidance on when they may reach profitability. This factor may exceed some investors risk appetite when analysing Paysafe stock. However the strong revenue/EBITDA forecasts for 2021-23 does suggest the company may be on the road to profitability. The reverse merger has also bolstered Paysafe’s cash position which is expected to accelerate growth opportunities within the business.
“Today, more than ever, businesses and consumers need to connect and seamlessly transact via digital commerce. This is what Paysafe does best through our industry-leading payment processing, digital wallet, and online cash solutions. This transaction will allow us to accelerate our growth opportunities across the business, particularly in fast growth sectors such as iGaming where we are the payments partner of choice.”Philip McHugh, CEO of Paysafe, stated in merger announcement
In summary, the bullish arguments for Paysafe stock include the strong upside from Wallstreet price targets alongside positive revenue forecasts. In addition, the cash injection from the reverse merger will enable further growth prospects for the business in the future. However, it’s important to note the business is still a journey away from profitability which may concern some investors.
Written by Tyger Fitzpatrick, Founder of Youth Investment Group.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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