Special purpose acquisition company (SPAC) Foley Trasimene Acquisition Corp II (NYSE: BFT)
plans to reverse merge with PaySafe, a global integrated payments platform and digital wallet in the first-half of 2021. After the merger, the new business combination will trade on the NYSE under the symbol PSFE. The pandemic has accelerated the regulatory approval of digital sportsbooks
as cash-strapped states desperately seek out new sources of tax revenues. While PayPal (NASDAQ: PYPL)
and Square (NYSE: SQ)
accommodate the needs of digital consumers with bank accounts, they fall short serving the 22% of U.S. households that are underbanked or unbanked, meaning no bank accounts. Paysafe fills this void with the recent rollout of Paysafecash enabling U.S. consumers to pay rent, government bills and engage in eCommerce. Risk-tolerant investors seeking to capitalize on the continued growth of iGaming with an alternate digital payments platform can monitor BFT for opportunistic pullback opportunities.
BFT is run by legendary investor Bill Foley, whose 40-year acquisition career includes Fidelity & Guaranty Life, Dun & Bradstreet, Foley Family Wines and is a co-owner of the NHL hockey team Vegas Golden Knights. The underlying company to reverse merge into BFT is Paysafe. Paysafe was created from the merger between Skrill and Neteller, which operate in over 120 markets. It’s iGaming eCash network operates in over 50 markets and its POS ecommerce payments platform is utilized in the U.S., Canada and Europe. Paysafe estimates U.S. iGaming business can grow at a compound annual growth rate (CAGR) of 52% through 2025. The Company estimates $103 billion of 2021 transactional volume and 11% organic CAGR through 2023. Paysafe operates B2B and B2C online payment networks offering POS, ecommerce processing, digital wallets and eCash solutions. The Company also fills a void when it comes to serving the underbanked population without access to credit/debit cards and bank accounts. It is an asset light business as online gaming wallets require funds to be deposited first, therefore the risk diminishes for Paysafe. The Company collects hefty transaction fees from gamers as well as iGaming sites that are willing to join the network.
A Note About SPAC Trading
With SPACs, it’s prudent to be aware of when prices tend to rise and collapse. Since BFT has already announced the reverse merger with Paysafe, shares will likely rise into the shareholder approval for the merger. Upon final approval, BFT shares can convert to PSFE shares the very next day. However, the newly listed stocks tend to sell-off for the first few days to weeks as insiders cash out. Take a look at electronic vehicle (EV) maker Canoo (NASDAQ: GOEV). Canoo reverse merged with SPAC Hennessy Capital Acquisition Corp II (old symbol was HCAC) on Dec. 22, 2020. Shares briefly ticked $24.90 before proceeding to sell-off for eight trading days hitting a low price of $12.00 on Jan. 4, 2021, before bouncing. If trading BFT shares long, be aware that shares are highly likely to trade down after the reverse merger and it’s prudent to sell the news. The combination of trend tailwinds converging for Paysafe makes it an attractive play for risk-tolerant investors seeking exposure at opportunistic pullback levels.
BFT Opportunistic Pullback Levels
We use the rifle charts on the weekly and daily time frames to provide a short-term perspective for nimble trades and only the highest-risk tolerant investors to consider trading BFT shares. The weekly rifle chart only has enough data to generate the upper Bollinger Bands (BBs) at $13.68 and the 5-period moving average (MA) at $14.66. The daily rifle chart peaked at the $17.01 Fibonacci (fib) level. The daily upper Bollinger Bands (BBs) sit at $16.57. The daily market structure low (MSL) triggers above $14.93 versus the weekly market structure high (MSH) trigger below $13.68. The daily stochastic has been oscillating down as the 5-period and 15-period MAs are flat. A deeper daily stochastic oscillation towards the 20-band can provide risk-tolerant investors opportunistic pullback levels at the $14.23 fib, $13.52 fib, $12.83 fib, $12.51 fib and the $11.76 fib. Potential upside trajectories range from the $17.01 fib to the $20.49 fib. The announcement of the shareholder vote date will be critical as shares tend to rise into the vote but tend to drop after the conversion.
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