Paysafe stock crashes 40% after weak results and forward guidance
- Published: 12th November 2021
The Paysafe stock price crashed by more than 40% on Thursday as investors reflected on the company’s weak guidance. The stock has crashed by about 60% in the past three months.
Paysafe growth decelerating
Paysafe is a payment company that owns some of the best-known brands in the industry. It owns Neteller, a company that provides virtual and plastic cards to global customers. The company also owns Skrill, a company whose product is relatively similar to PayPal.
Paysafe also owns the Petroleum Card Services (PCS), Income Access, Paysafe Cash and Paysafe Card. These products help companies receive money from customers. The company is now valued at about $4 billion.
In a report this week, the company said that its total processed volume surged by 19% in the third quarter. It processed more than $31.1 billion, which brought revenue of more $353 million. The company made a loss of $147 million in the quarter, which was substantially bigger than the $38 million it lost in the same quarter last year.
Its earnings before interest, tax, depreciation, and armotization fell by 1%. In a statement, the company’s CEO said:
“While the recent trend will drive an adjusted financial outlook, we continue to see strong momentum across the business. Our position to win in high growth and disruptive markets including online sports betting and crypto continues to accelerate, coupled with strong delivery against our cost and technology platform targets.”
Payment companies mixed results
Payment companies have generally reported weaker quarterly results. For example, PayPal reported weak results as the company’s growth slowed. Similarly, companies like Square, Remitly, Wise, and Western Union reported weak results.
This trend will likely continue as the world reopens and the economy improves. Also, this growth is mostly because many developed countries like the United States are no longer offering direct stimulus to individuals.
To cushion itself against these risks, Paysafe is expanding its solutions into virtual gaming. It has already incorporated betting and cryptocurrency industries. Still, in these, the firm is facing strong competition.
Crispus Nyaga is a full-time financial analyst and trader with more than 7 years in the industry. He has been fortunate to work for several fintech companies, mostly from Europe, Asia, and North America. His work is published in leading platforms like Seeking Alpha, Invezz, InvestingCube, Capital.com, and Marketwatch. Crispus operates from a private office in Nairobi.