In a world where investors pay for payment innovation, PaySafe (NASDAQ:PSFE) stock is unique.

This is a global payments processor whose stock is cheap. It’s on pace to bring in $1.5 billion of revenue for 2021, operating near breakeven, but the market cap is just $5.7 billion.

That’s cheaper than companies like Fiserv (NASDAQ:FISV) and Fidelity National Information Systems (NYSE:FIS).

The lower price is due to PaySafe’s debt, used to fund acquisitions and perceived risk. A growing portion of its processing volume comes from Latin America. It’s an aggressive global acquirer. It’s also into online gambling and is based in London rather than the U.S.

Still, analysts are flummoxed. All seven who follow it at Tipranks are screaming “Buy,” but the stock is down nearly 50% in 2021. Still, there are reasons for caution.

First, PaySafe came public through a special purpose acquisition company (SPAC). The deal went down in March, through Foley Trasimene Acquisition II, which traded as BFT.

Its initial valuation was $9 billion. Bill Foley, the Foley in Foley Trasimene, knows the payment business. He’s vice-chairman of Fidelity National. Yet since coming public as PSFE stock, momentum has been nowhere but down.

Second, PaySafe is relentlessly acquisitive. The acquisitions are adding to PaySafe’s debt. They could water down the stock. The company made three acquisitions during August alone. Two were in the fast-growing Latin American market.

Then there are the niches it’s choosing for growth. PaySafe is big in gambling, including online sports betting, just starting up in the U.S. While it’s a processor, not a gaming stock, some analysts lump it in with the gambling plays.

Gambling and PSFE Stock

Analysts have been looking at the risks, however, and pounding the table for PaySafe stock.

Our Tom Kerr calls PaySafe a “pick and shovel play”  in that it offers payment tools. It doesn’t sell digital goods through Fortnite, it just processes transactions for those who do. While it’s expanding globally, almost half the revenue still comes from North America.

PaySafe has been paying up for acquisitions. Its two Latin American purchases took its leverage ratio to 5. That means there’s now a lot of debt on the books.

There was over $2 billion of it in June, even before the new deals. Potentially, it could have a liquidity problem, as our Stavros Georgiadis notes.

Given the current problems at Evergrande, and PaySafe’s international footprint, some investors may be holding back.

While conscious of the risks our Mark Hake also likes PaySafe. He estimates it’s worth $8 billion, 25% more than it’s now trading for.

He called its latest quarterly results, released Aug. 16, excellent. They showed a net income of $6.6 million on revenue of $384 million, up 12.6% from a year earlier.

The Bottom Line

Someone is going to buy this company.

Processors are looking for growth and innovation. They’re all focused on Square (NASDAQ:SQ), which has only grown more popular as it has gone into various banking and investment niches.

Gambling doesn’t scare the payments industry. Casino contracts are highly prized. Processors don’t hand gamblers money they don’t have. When the gambler is out of money, they reject the transaction. Many casinos have special rules for gambler transactions aimed at keeping them, and the gamblers, out of trouble.

This means the downside risk of PaySafe stock is limited. There remain potential suitors for the company. The most likely is Fidelity National, which has a market cap of nearly $75 billion. But if Foley sees a better bid, he will certainly take it.

The debt means PaySafe’s enterprise value is fair, not low. But you can buy it here.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.