Is Payoneer (PAYO) stock a good buy?

Is Payoneer (PAYO) stock a good buy?

➡️ Although we do outline some of the latest news as of the date of this post, this review on Payoneer will help you determine if this stock is a good buy, sell, or hold. Our goal is to help you understand the company, where the company is going, the competition, and the leadership. Keep in mind, investing is more than just numbers. It’s wise to look past the numbers and look at the business. This review does exactly that.

Payoneer is a financial services company that provides online money transfer, digital payment services, and provides customers with working capital. They were founded in 2005, headquartered in New York, and available in 190 countries and territories.

Table of Contents

Tykr Rating

  • Summary: On Sale
  • Score: 72/100
  • MOS: 90%
  • Share Price: $6
  • Sticker Price: $34

Payoneer Company History

  • In 2005, Payoneer was founded with $2M in seed funding from founder and then-CEO Yuval Tal and other private investors. Tal previously co-founded E4X in 2005, an early payment solutions company that grossed over $500M the first five years.
  • In 2007, VC firm 83North led an additional $4M funding with other firms including Carmel Ventures, Crossbar Capital, Ping An, Wellington Management, Susquehanna Growth Equity, Naftali Bennett, and Nyca Partners.
  • In 2016, Payoneer acquired escrow company Armor Payments aiming to address the market for B2B transactions between $500 and $1M where card cards and letters of credit are not suitable. 
  • In 2016, Payoneer also began to work with Latin American e-commerce site Linio.
  • In 2016, Payoneer added an automated tax service to its mass payout offering.
  • In 2016, Payoneer raised $180M from Technology Crossover Ventures, bringing the total funding to $234M.
  • In 2017, China Broadband Capital (CBC) invested in Payoneer.
  • In 2017, Payoneer was named CNBC’s 40th most disruptive company.
  • In 2018, Payoneer was named CNBC’s 13th most disrupted company.
  • In 2019, Payoneer expanded its Capital Advanced Service, specifically for e-commerce sellers in the US which provided merchants with immediate access to working capital.
  • In 2019, Payooner partnered with the freelancing platform Toptal to facilitate cross-border payments, allowing more efficient movement of wages between employer and remote workers.
  • In 2019, Payoneer hired FT Partners to help facilitate the expansion of the company and an additional round of private funding.
  • In 2019, Payoneer acquired Optile, a German payments orchestration platform. This acquisition allows Payoneer to offer merchant services and consumer payment acceptance in addition to the B2B services they have been providing since inception.
  • In 2020, Payoneer was included in the Forbes Fintech 50: The Most Innovative Fintech Companies in 2020.
  • In 2021, Wirecard receiving accounts on Payoneer can only receive payments from approved payment sources. Wirecard has been insolvent since June 25, 2020.
  • In 2021, Payoneer went public through a SPAC.
  • In 2021, Payoneer launched Payoneer Checkout, a service that enables merchants to work direct-to-consumer.

Payoneer Business Model

How does Payoneer make money?

Payoneer offers the following products to consumers and businesses.

  • Business to Business (with Payoneer balance) – When you receive payments from other Payoneer customers who pay from their Payoneer balance, it’s always free!
  • Business to Business – This is where Payoneer generates the majority of its revenue and what the company is best known for. Businesses can send payments to other businesses one at a time or en masse. If you send money with a credit card, there is a 3% transaction fee. If you send money with your bank account, there is a 1% transaction fee.
  • Marketplaces – Payoneer is available on thousands of merchant platforms including Amazon, Airbnb, Upwork, Fiverr, and Wish. Payoneer is not a point-of-sale payment processor like PayPal or Square, it’s a platform that allows merchants and businesses to transfer funds from the platform (for example Amazon) to their bank account. In other words, Payoneer is the bridge that allows merchants to get paid. Fees vary per marketplace. 
  • Receiving Accounts – You can choose to send money to your local bank in the same currency you were paid or convert it to another currency. The fees for the same currency are $1.50 and the currency conversion can charge up to 2%. Payoneer is available with more than 150 currencies.
  • Annual account fee – If you have an open Payoneer account but don’t make transactions within a 12-month period, you will be charged $29.95/year. If you do make one or more transactions, the account fee is waived.

Payoneer News

This article from investorplace.com lists 5 stocks investors should stop panic selling which includes Nokia, Under Armour, Payoneer, Golden Ocean Group, and New York Community Bancorp. The reason Payoneer was listed was because of the fast-growing revenue, the partnerships with companies like Amazon and Upwork, and the use for businesses to pay other businesses across the world.

This article from investorplace.com lists 7 stocks under $20 to buy and hold forever which include Payoneer, Ford, Impala Platinum, Genco, Qualtrics, Lucid, and Orange. Payoneer is listed because it focuses on reducing friction in global payments, especially for e-commerce. For example, an international business can use Payoneer to get paid in multiple currencies, bill global clients, and sell on marketplaces across the globe. It aggregates all of those transactions and allows users to then send the proceeds to their individual bank accounts. 

This article from gurufocus.com lists 3 tech stocks for growth-focused investors including Affirm Holdings, Steam, and Payoneer. The reason Payoneer is listed is that global revenue increased by 36% year over year.

This article from fool.com states the share price has recently increased because both reported revenue and reported EPS exceeded analyst expectations. Co-CEO of Payoneer, Scott Galit, also had some encouraging words to say about the company “Results highlight our multi-year investments to build a diverse and global business model across industries, products, and geographies, which together continues to increase our overall effective take rate. We are growing the number of customers using our services, benefiting from our strategic expansion into higher-value services, as well as seeing better-than-expected results from Ukraine and rising interest rate tailwinds.”

For the latest news on this stock, please login to Tykr.

Payoneer Competition

Payoneer (PAYO)

  • Summary: On Sale
  • Score: 72/100
  • MOS: 90%
  • Share Price: $6
  • Sticker Price: $34
  • Revenue: $473M

PayPal (PYPL)

  • Summary: Watch
  • Score: 56/100
  • MOS:0%
  • Share Price: $91
  • Sticker Price: $92
  • Revenue: $25B

Block (SQ)

  • Summary: Overpriced
  • Score: 61/100
  • MOS:0%
  • Share Price: $61
  • Sticker Price: $62
  • Revenue: $17B

Payoneer is best known for its business-to-business mass payment functionality. PayPal and Block are more focused on point-of-sale transaction fees. Payoneer is more competitive with private companies including Wise, Tipalti, Skrill, and Remitly.

Here is a quick comparison to Wise, which is a platform Tykr uses to pay other companies around the globe.

  • Fees
    • Wise charges less than 1%
    • Payoneer charges 3% for credit card and 1% for ACH
  • Exchange rates
    • Wise matches the mid-market exchange rate
    • Payoneer charges a 2% exchange rate
  • Locations
    • Wise is located in 61 countries 
    • Payoneer is located in 190 countries and territories
  • Speed
    • Wise can transfer fees instantaneously in some cases
    • Payoneer can transfer fees somewhere between 2 and 5 days
  • Customer Ratings
    • Wise has a Trustpilot rating of 4.5
    • Payoneer has a Trustpilot rating of 4.3

Payoneer 4Ms

✅ MOS: The financials of Payoneer are outstanding, especially for a company that recently went public. The score of 72/100 shows this company is well operated and the MOS of 90% shows strong upside potential.

✅ Meaning: FinTech (Financial Technology) is a hot industry and always ripe for disruption. The need to move money around the globe at high speed is in high demand. 

❌Moat: There are a few issues with this company to pay close attention to. First, there are a lot of competitors that focus on business-to-business transactions. Second, Payoneer doesn’t have the variety of revenue streams like you see with PayPal and Square. Yes, Payoneer is a great choice for sending money to other businesses but it’s not upselling or cross-selling other products, which is what PayPal does especially well.

✅ Management: Scott Galit has served as CEO for 12 years but was recently joined by John Caplan as co-CEO. The co-CEO dynamic is a succession plan for Caplan who will assume the role of sole CEO in 2023 while Galit moves into a more strategic role. Galit’s previous experience includes 2 years at Meta Payment Systems, 2 years at MasterCard, and 5 years at First Data. Overall, he has over 20 years of experience in the FinTech industry. Caplan has served in leadership roles at companies including about.com, Ford Models, OpenSky, and Alibaba (Alibaba acquired OpenSky). I do not see as much FinTech experience with Caplan as I do with Galit but based on a newsletter on Payoneer’s website, Caplan was appointed CEO because of his experience quickly scaling global companies. I do believe Caplan is a good fit for CEO. He’s well respected and has solid global growth experience. It’ll be interesting to see what he does to scale Payoneer and perhaps add more revenue streams. The Glassdoor rating is 3.9 and the CEO approval is 99%. We like to see a Glassdoor rating of 4.0 or higher but the CEO approval of 100% is impressive. 

If you’re interested, you may complete your own 4M checklist on this stock or other stocks by logging into Tykr.

Payoneer Financials

Now let’s take a look at the financials. A wise investor should be able to read the income statement, cash flow statement, and balance sheet and within 60 seconds have a pretty good idea of how the business is performing.

Revenue (Found on the Income Statement)

  • 2018: $260M
  • 2019: $317M
  • 2020: $345M
  • 2021: $473M
  • Revenue has consistently increased which is a great sign.

Net Income (Found on the Income Statement)

  • 2018: -$7M
  • 2019: -$625K
  • 2020: -$23M
  • 2021: -$33M
  • Net income year over year has continued to decline but when you take a closer look at the quarterly statements, the last two quarters have turned positive which is a reason why the MOS is now 90%.

EPS (Found on the Income Statement)

  • 2018: -.02
  • 2019: 0
  • 2020: -.07
  • 2021: -.10
  • EPS year over year has declined but similar to the net income, the last few quarters have improved. This is a good sign.

Free Cash Flow (Found on the Cash Flow Statement)

  • 2018: -$16M
  • 2019: -$31M
  • 2020: -$4.5M
  • 2021: -$884K
  • Free Cash Flow has improved which is a great sign. Now we want to see those numbers turn positive.

Total Assets (Found on the Balance Sheet)

  • 2018: Not reported
  • 2019: $1.9B
  • 2020: $3.6B
  • 2021: $5B
  • Total Assets have consistently increased which is a good sign.

Total Liabilities (Found on the Balance Sheet)

  • 2018: Not reported
  • 2019: $1.9B
  • 2020: $3.6B
  • 2021: $4.5B
  • Total Liabilities have increased which is okay. This is primarily due to the hiring of more employees.

Total Debt (Found on the Balance Sheet)

  • 2018: Not reported
  • 2019: $60M
  • 2020: $40M
  • 2021: $22M
  • Total Debt has decreased. This is rare for a fast-growing tech company that recently went public and a contributor to the high score.

Total Equity (Found on the Balance Sheet)

  • 2018: Not reported
  • 2019: -$5M
  • 2020: $24M
  • 2021: $487M
  • Total Equity significantly improved in 2021 which is a great sign.

Is Payoneer stock a good buy?

The MOS, Meaning, and Management look good but the Moat is a risk. Payoneer is doing everything right but they are not as well diversified with revenue streams as other FinTech companies. The other issue with this stock is the share price. As stated in this article, this is a penny stock. It’s wise to let institutions drive this price higher than $10 (USD) before retail investors get involved.

At this point, I would add this stock to your watchlist and pay attention to the share price. If the price breaks out past $10, this may be a stock to add to your portfolio.

The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.

If you found this stock review interesting, you may also like this review on Starbucks.