Stockchase Insights Payfare PAY-T BUY Sep 10, 2024

PAY earns approximately 70-80% of total revenue from network interchange fees from payment networks and 20-30% from user banking fees such as ATM withdrawls, money transfers, and foreign exchange. So no, they do not take a percentage of the workers paycheck, rather they operate similar to a credit card or transaction processing company like Paypal, Mastercard, or Visa. We like it because it's funamamentals are strong, it has a cheap valuation, a large growing target market, and is integrated with the largest companies (Uber, Lyft, Doordash). Downside risks being a fintech is that another bigger player comes out with a similar platform and the space gets very fragemented. Fintech companies can be very economically attractive, but are typically quite replicable, so PAY will need to ensure that it is able to continue to grow and sustain its user base. This is in addition to the general small cap volatility it will face. Overall we think it is a strong small cap name and looks good at 11x forward earnings. 
Unlock Premium - Try 5i Free