Payoneer Is Set to Merge With FTOC, Future Looks Bright
On June 23, FTOC SPAC shareholders approved its merger with Payoneer. As a result, the company will go public soon. What is Payoneer's stock forecast after the merger?
Payoneer is a global payment and commerce platform that's scheduled to go public soon through a reverse merger with the SPAC FTAC Olympus Acquisition Corp. (FTOC). What is Payoneer's (PAYO) stock forecast after the FTOC merger?
Payoneer is based in Israel. The company's backers include Wellington Management Co., TCV, Greylock Partners, Ping An, and Viola Ventures. Payoneer is a payment service provider to big firms like Amazon, Google, Fiverr, and Airbnb. According to its CEO, Scott Galit, the startup is working with nine of the largest 20 companies by market cap in the world. The company's business got a boost from the COVID-19 pandemic, which accelerated the shift to online shopping and digital transactions.
When will Payoneer start trading?
On June 23, FTAC shareholders approved the proposed business combination with Payoneer. The combined company will be named Payoneer Global Inc. The common stock and warrants are expected to start trading on the Nasdaq stock market under the ticker symbol “PAYO” and “PAYOW,” respectively, on June 28.
Payoneer-FTOC transaction details
Payoneer will have a pro forma enterprise value of $3.27 billion, according to the company's investor presentation. The EV was at the listing price of FTOC of $10. Since the current market price of FTOC isn't much different at $10.5, the pro forma EV currently would be $3.36 billion. Under the terms of the transaction, Payoneer will receive cash of $755 million from cash held in trust and $300 million from PIPE.
Based on the company’s expected revenues of $432 million for 2021, Payoneer is trading at a 2021 EV-to-revenue multiple of 7.8x. In comparison, Payoneer’s larger peer, PayPal is trading at an NTM EV-to-revenue multiple of 12.6x. While PayPal is the market leader with higher volumes, Payoneer has some advantages over PayPal, including more currencies supported and lower fees.
Payoneer’s rebranding strategy
Payoneer has rebranded itself ahead of the public listing. The company is rebranding itself to reflect its current position in the market and to announce the new phase in its growth from a “young disrupter to industry leader.” Payoneer elaborated that from a pre-fintech company in 2005, its business has moved to the heart of digital and borderless commerce. Its new brand color is “universal,” which reflects its promise to be for everyone everywhere. The new symbol is a circle, which illustrates the company's journey to becoming a single destination.
Is Payoneer a good investment?
Reportedly, Payoneer is profitable. Also, the company is expected to grow its revenues to $432 million in 2021 from $345.6 million in 2020—a growth of 25 percent YoY.
In 2020, Payoneer processed over $44 billion in transaction volume for over 5 million customers in over 7,000 unique trade corridors. Its results for the first quarter of 2021 were also impressive and the company beat most of its internal metrics. It also surpassed $100 million in quarterly revenues for the first time. Payoneer's revenues rose by 23 percent YoY in the first quarter, while its volumes rose by 61 percent.
Payoneer is on a high growth trajectory. Also, its fundamentals provide reasonable confidence in the company’s future prospects given the overall industry’s growth as well as the company’s expansion efforts. These factors and a reasonable valuation offer an attractive entry point for potential long-term investors.