June 18, 2024


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Paysafe’s SPAC Fever may have faded too soon

On the surface, Paysafe (NYSE: PSFE at https://www.webull.com/quote/nyse-psfe) stock seems to be one of the best stories to emerge from the special purpose acquisition business (SPAC) phenomena.

To begin with, SPACs are often described by their sponsors. Bill Foley, who quarterbacked the reverse merger that would ultimately become PSFE property, has a strong experience of deal-making, as many of my InvestorPlace colleagues found out.

Second, the underlying market is incredibly important.

“PSFE is a 20-year-old corporation with 3,400 staff and over $1.5 billion in revenues,” our own Tom Kerr clarified. Paysafe is a specialist payments firm that focuses on three areas:

  1. Digital currency applications for iGaming sites
  2. Digital wallets with the saved value
  3. POS and eCommerce solutions.”

The iGaming vertical, of course, was what piqued investors’ interest in PSFE stock. Customers are primarily hungry for a variety of wagering events according to nyse psfe.

Sports gambling was one of the most common industries before the novel coronavirus pandemic. Many states have legalized sports betting due to favorable legislation passed in 2018, which enabled states to do so if they desired, fueling the iGaming trend.

And when we were infected with the coronavirus, it provided an unwelcome catalyst. Following the cessation in football, there was a surge of participation in betting on games and tournaments. Naturally, this sparked a lot of interest in PSFE stock right away.

You can’t overlook the promise of esports. Industry analysts predict that the global esports market will reach $1.86 billion by 2026. Video games, as well as gaming tournaments, are serious business beyond what older generations can think. Esports is where the fun is with younger millennials and Generation Z.

One of the maybe unexpected disadvantages of blank-check companies, I listed in my Benzinga pros and cons study of SPACs, is that they aren’t often the best performers post-merger.

SPACs “underperformed the general sector by around 3% annually in the first three years” since their initial public offering, according to data quoted by the Wall Street Journal.

What is the reason for this? Part of the cause is that SPAC sponsors get a lot of money, normally 20% ownership in the merged company. Sponsors are incentivized to win a bargain, not always a decent one, which is a not-so-hidden fact concerning SPACs. As a result, it’s important that you find sponsors who recognize what they’re doing.

Bill Foley, beyond a doubt, counts as a knowledgeable person. That’s just over the $10 mark, which is when most SPACs start.This hasn’t always been a good sign for Paysafe. According to the Wall Street Journal, “more than half of the blank-check firms that went public in 2015 and 2016 are already priced below their IPO mark, according to the Journal’s analysis.” There are many other stocks such as nyse et which you can check at https://www.webull.com/quote/nyse-et.