Payfare Inc. (TSX: PAY) is a Canada-based financial technology company, offering instant payment, mobile banking, and loyalty reward solutions. The company has strategic ties with platforms and marketplaces such as Uber, Lyft, and DoorDash to provide financial security and inclusion for their workforce.

Key highlights

• Strategic ties with Visa in the USA: On March 29, 2022, the company announced its collaboration with Visa in the USA, obtaining Visa Ready for Fintech Enablers Certification along with the expansion of its platform with Visa SavingsEdge in 2021. This will enable Payfare to add Visa Direct to its platform, empowering it to facilitate a real-time payout experience for its gig workers.

• Increased in revenues: The company reported a whopping rise of 225% in its revenue which exploded to CAD 43.77 million in FY21 as compared to CAD 13.44 million in FY20. The launch at the national level and ramp-up of the DoorDash program along with the growth experienced in the Lyft program were the key reasons for the increase in revenues in FY21.

• Negative adjusted EBITDA: For FY21, the group witnessed an increase in its negative adjusted EBITDA of CAD 10.04 million as compared to the negative adjusted EBITDA of CAD 6.38 million in FY20.

• Declining profitability margins: Below is the graphical representation of the declining profitability margins in FY21 as compared to the industry median.

        Source: Refinitiv, Analysis by Kalkine Group

Stock recommendation

The company reported higher revenue during FY21 of CAD 43.77 million vs CAD 13.33 million in FY20 and reduced the net losses to CAD 21.37 million in FY21 vs the net loss of CAD 26.32 million in the FY20. The recent strategic ties with Visa will enable the company to provide real-time experience to its gig customers, which is a key positive.

The stock was in a continuous downtrend after forming the lifetime highs of CAD 13.79 and currently consolidating at the support levels between CAD 6.5 to CAD 6.7. The Relative Strength Index is showing a reading of 53.39, which is an indication of positive bias encrypting in the price action, but the stock must sustain above the 50 DMA of 6.28 levels to witness further upside. 

Therefore, based on the above rationales and analysis of the chat pattern, we recommend a “Watch” rating at the closing market price of CAD 6.80 on April 12, 2022. Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on April 12, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.