Paysafe’s Shares Climb As Wall Street Buzzes With Takeover Talk

Paysafe Ltd., one of the world’s largest payments processors, has developed a highly sophisticated stake in online gaming, but lately the odds may favor a change in ownership for the publicly held London-based company, according to industry speculation. News emerged late Thursday that the company’s current valuation–$1.4 billion, down from $9 billion at the time of its SPAC in 2020—may be pushing the processor to look beyond the public markets.

That speculation is driving Paysafe’s equity. Its shares were trading at $23.29 in the early going Friday, an upward spike from the $19s the shares were seeing earlier in the week and the lows in the $17s last fall. Overall, its shares are up 67% compared to a year ago. Paysafe did not respond to a query from Digital Transactions News regarding reports it may be exploring a sale.

Paysafe in December 2020 reached an agreement with Foley Trasimene Acquisition Co. to go public through a special purpose acquisition company (SPAC) arrangement. Since then, its shares have traded under the symbol PSFE.

The company offers digital wallets as well as card processing and other services for casinos and other venues.  That positioning has demanded rigorous vetting. “They do handle a lot of high risk,” notes Cliff Gray, principal at Gray Consulting, a payments advisory. “But they have a sophisticated system, [and] they have a foundation to grow.”

In November, Paysafe reported it had doubled the size of its sales force over the previous months in an effort to spur growth. It has also been working closely with Fiserv Inc., a major U.S. processor. This alliance has led to Paysafe’s adoption of Fiserv’s Clover point-of-sale technology, which accounted for $311 billion in annualized volume for Paysafe in its September quarter last year.

Overall, Paysafe could be a good bet for private ownership, some observers note. “It’s not their only option, but one of their better options,” says Gray. “They need that kind of capital to keep things running, much less grow.” The company’s approach to the sophisticated structure of modern payments may also help the company, he says. “It’s a pretty sophisticated [company],” he adds. “They work pretty carefully with the gateways.”

Paysafe disappointed Wall Street with its November earnings release, which reported 51 cents in earnings per share, down 7 cents from what analysts expected. Now analysts are noting the perils of initial valuations driven by SPACs, which were a trend a few years ago but have since become far less common. “The company’s trajectory underscores the volatility of SPAC-driven valuations and the challenges that come with sustaining long-term growth in the digital payments space,” says one online investor note.