Paysafe Stock Faces Analyst Drubbing After Million-Dollar Deal

Options traders don't appear to share the sentiment

Deputy Editor
Aug 17, 2021 at 9:54 AM
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While digital payment name Paysafe Ltd (NYSE:PSFE) exited the earnings confessional on Monday morning with a second-quarter revenue beat, a softer-than-expected third-quarter outlook weighed on shares, sending PSFE down 15.5% during yesterday's session. News that Paysafe would acquire sector peer SafetyPay in a $441 million cash deal in an effort to expand its presence in Latin America also contributed to the selloff, and today, several analysts are chiming in with bear notes as a result. 

More specifically, no fewer than five analysts slashed their price targets. The lowest came from Credit Suisse to $12 from $16. Headed into today, the 12-month consensus price target of $14.44 represented a 68.5% premium to current levels, while all five analysts in coverage consider the stock a "buy" or better. This could leave PSFE vulnerable to even more downgrades and/or price-target cuts going forward. 

This is especially true considering the equity's 42.9% year-to-date deficit. Prior to yesterday's plummet, solid pressure had already emerged at the 60-day moving average. Plus, this gap has the stock well below a former floor at the $10 region. PSFE was last seen down 2% at $8.44 -- extending yesterday's record lows. 

Options volume on PSFE is already running wild. So far, 75,000 calls and 20,000 puts have crossed the tape -- six time the intraday average. The most popular is August 9 call, followed by the 10 call in the same series, with positions being opened at both. This suggests these traders consider PSFE's selloff temporary, and expect the underlying stock to rise slightly higher by the time these options expire this Friday, Aug. 20. 

The equity's 14-day Relative Strength Index (RSI) of 30 does suggest a short-term bounce could be in the cards, as it sits right on the cusp of "oversold" territory. 

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