Paysafe, $PSFE, took a nose dive last week after missing earnings and being downgraded by most analyst. Since August, the stock had been trading between $7 and $9 with good support at $7.
Currently, the stock is trading at around $4.50. Most analyst dropped the target price to down to anywhere from $7 to $13. Most analyst have the stock as a moderate buy or strong hold.
$PSFE has 723 million shares outstanding. This puts their current market cap at around $3.5 Billion. On the low side, valuations start around $5 Billion and stretch well over $10 Billion. This means that Paysafe is EXTREMELY ripe for buyout offers. While their digital wallet is suffering (which caused the earnings miss), the rest of their business is thriving. They did 1.49B in revenue last year with gross profit over $900 million.
The case for $PSFE, therefore, is clear cut. The 52 week low of $4.11 has been tested and offers really good support levels. In the short term, the price will increase by 50% – $75% which presents a great return on a short term swing trade with almost 0 downside. If the merger rumors are true, then there are several potential buyers out there who are almost assuredly eyeing a takeover at these prices. If any of those rumors materialize, then the price could easily climb 100% to 200%.
The biggest downside to $PSFE is that this may take some time for the price to run (could be weeks or could be today). When it does, these $4.50 shares will be gone very quickly. After declining volume over the past two days, watch for volume spikes on the 4h charts (with little price increase) to signal that institutions are loading up.
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