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Fundamental analysis: Paysafe (#PSFE)

Paysafe Group Limited (#PSFE) is a multinational online payments company. The group offers services under both the Paysafe brand and its subsidiary brands that have joined the group through several mergers and acquisitions, notably Neteller, Skrill and Paysafecard

Paysafe has received positive ratings from analysts due to its profitable positioning as a global payments provider focused on ecommerce and its integrated solutions for merchants and consumers.

In addition, partnerships with American betting companies and the most recent with the cryptocurrency platform Coinbase give it a bullish scenario for the medium term.

We believe the recent downtrend is largely due to the heavy selling the SPAC sector has experienced in recent months.

Paysafe's current swings offer a great entry level

⚡️Factors of growth:

  • Credit Suisse expects a compound annual growth rate (CAGR) of ~ 10% for the period 2020-2023 (with an EBITDA CAGR approaching ~ 16%).

  • Currently, about 1% of Paysafe's total revenue comes from payment processing in the online gambling industry in the United States - growing legalization across states and growing partnerships with nearly every major gambling operator. Online gambling could lead to an exponential increase in revenue.

  • Cross-selling opportunity between the Paysafe digital wallet and the eCash payment solution.

  • Paysafe has extended the partnership with Coinbase for the payment management of the platform's Visa debit card

  • Paysafe has extended its partnership with Microsoft for Xbox platform payment services

📖 Financial indicators:

  • High Growth Earnings: PSFEs are expected to become profitable in the next 3 years.

  • Stable Cash Flow: Although unprofitable PSFE has a sufficient cash track for more than 3 years if it maintains its current level of positive free cash flow.

  • Short-Term Liabilities: PSFE's short-term assets ($ 2.0 billion) outweigh its short-term liabilities ($ 1.8 billion).

  • Long-Term Liabilities: PSFE's short-term assets ($ 2.0 billion) do not cover its long-term liabilities ($ 2.5 billion)

  • Q1 2021 Revenues: $ 377m, + 5% yoy

  • Payment volume 2021: $ 27.7 billion, + 8% year-over-year

  • Revenues from payment services: -19% year on year due to the negative impact of Covid-19 on the retail sector (especially small and medium-sized enterprises). To date 47% of Paysafe's business

  • Revenues from gaming services: + 66% year on year for iGaming services (sports betting and online casino)

  • Revenues from eCash services: + 63% year on year for prepaid card payment services, where a bank account is not required. To date 30% of Paysafe's business

Purchase Price *: $ 11.20 - $ 11.80

Target price: $ 17.00

Stop loss at $ 9.00

* this price range allows to maintain a minimum return / risk of 1.86

OTB Global Investments

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