It was about a year ago when investors found out Paysafe (New York Stock Exchange:PSFE) through the Special Purpose Acquisition Corporation (SPAC), Foley Trasimene Acquisition II. On March 31, PSFE stock debuted. However, if you are an early investor in PSFE stock, you lose. Paysafe is a financial technology company and a pioneer in the online gaming sector.
There can be many explanations. One might simply be that investor sentiment toward SPAC’s stock has quickly soured. The stock delivered solid returns in August, but investors seem to be expecting the company to generate positive earnings. you did not. However, analysts expect Paysafe to grow earnings per share (EPS) by 112.50% in the next 12 months.
This leads me to believe that investors are confusing Paysafe with the company they might want. I reject this option in June. However, I have run out of other reasons to explain the PSFE stock’s lack of traction.
What makes the PSFE stock unique?
Since before the onset of the Covid-19 pandemic, the market has been a bit frothy. In general, investors will find companies that offer real innovation, but the stock is overrated. Paysafe offers a different scenario.
What I mean is that at first glance, there is nothing necessarily unique about what Paysafe has to offer. For example, recently the company Paysafe Publishers . launched, Affiliate Marketing Program. The company classifies this as a “unique performance marketing network” for advertisers and affiliates.
I’m sure there are elements of the program that are unique to Paysafe. But the concept is not new. PayPal and Square both offer affiliate marketing programs.
If that’s where the story ends, you can assume the PSFE stock has been properly valued. And when you take into account the company hungry for purchaseYou can see why some investors want to stay away.
But this is where it is important to see Paysafe for what it is. When you do, you can make an undervalued case. This is the perspective that analysts seem to agree with.
As a result, the stock is undervalued. But are investors looking at the correct narrative?
The best of the rest?
This is where it is important to note that Paysafe will not be PayPal (NASDAQ:PYPL) or Field (New York Stock Exchange:mint). However, this does not mean that it should be easily dismissed. Paysafe is the clear leader in online gaming transactions. The company has many compelling partnerships. And the runway seems clear, at least for now. PayPal and Square show no immediate interest in participating in online games.
Paysafe is also heavily involved in cryptocurrency. In the company’s latest earnings call, the company announced the acceptance of its digital wallet 37 cryptocurrencies in more than 80 markets It is live on 30 stock exchanges.
Buy PSFE shares at reasonable growth expectations
Colloquially, the phrase “the best of the rest” is used as a pejorative attempt to describe a company that is also first in the list of users. But in the case of PaySafe, it might be a good place to be. The company doesn’t claim it’s nothing. It appears to have very realistic growth expectations.
The company is the leader in handling online gaming transactions. This is a good place for the company to dominate. And while there’s nothing stopping PayPal or Square from continuing this business, PaySafe has the advantage of being a first step at least for now.
Retail investors are still very much in control of this stock and that means there is always an opportunity for a short squeeze. This is not a new story. However, there is no evidence of this happening yet. This doesn’t mean you shouldn’t buy PSFE shares; It’s just something to think about.
Posted by Chris Marcoch He did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author, and are subject to InvestorPlace.com Publication Guidelines.
Chris Markuch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.