Monday, 14 October 2024
by BD Banks
The Heat is on for Shift4 Payments (FOUR) .
The payment-processing company said last month that it had been selected to power ticketing transactions for the National Basketball Association’s Miami Heat.
Related: Billionaire Jared Issacman marks major moment for space industry
Shift4’s end-to-end payment solution will facilitate a seamless ticket-buying experience for games at Miami’s Kaseya Center.
A month earlier, the Indianapolis Colts said they would be using Shift4’s end-to-end payments solutions to power the National Football League team’s ticketing at Lucas Oil Stadium.
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And Pacers Sports & Entertainment said it would use Shift4 to power ticket sales and food-service payments at Gainbridge Fieldhouse, home of the NBA’s Indiana Pacers.
Shift4 seems to be taking off, which shouldn’t be surprising given the fact that the company’s founder and CEO, Jared Isaacman, was part of the first all-civilian spacewalk in September.
We are back on Earth and look forward to sharing the results and our experiences with all of you. The scientists and doctors rightfully own all of our time for the next few days, but I did want to share a few thoughts as I reflect on our mission and what we set out to accomplish.… pic.twitter.com/Lr3hj5Tb7U
— Jared Isaacman (@rookisaacman) September 16, 2024
Isaacman, who founded Shift4 in 1999 when he was 16 years old, blasted off on a mission with Tesla (TSLA) CEO Elon Musk’s SpaceX and spent 10 minutes floating in the vacuum of space. The trip came just three years after he led a 2021 SpaceX mission as commander of the world’s first all-civilian mission to reach orbit.
“We stood on the shoulders of giants and we will continue to do so as we move forward and explore the final frontier,” he said on X, formerly Twitter, which Musk also owns.
Related: Analyst revamps Shift4 Payments stock outlook after acquisition uncertainty
The billionaire entrepreneur has also performed in air shows with the Black Diamond Jet Team and set a world record for circumnavigating the globe in a light jet.
“As we work to address today’s problems, we must also look to the future we want our children to grow up in,” Isaacman said in another post about his space mission.
“As a crew, we have always believed in humanity’s destiny among the stars — a belief that’s only been reinforced by our recent journey,” he added.
Shift4’s stock has been climbing, up 27.5% year-to-date and nearly 78% from a year ago.
In August, Shift4 reported second-quarter earnings of 59 cents per share, up from 43 cents a year earlier, on revenue of $827 million, up 30%.
“Clearly, there are winners and losers in payments,” Isaacman said in his letter to shareholders. “The losers provide little value beyond the approval and decline of credit card transactions, and as a result, there is little they can charge for that service.”
“The winners are bringing together software plus payments to deliver a more powerful commerce experience, and they typically charge more for the value being delivered, period,” he said.
Isaacman said that more than 99.9% of Shift4’s transactions are integrated into software, predominantly card present, “which is not easy and in verticals that require a lot of software to adequately serve.”
“It is important to realize there is not a single restaurant, hotel, sports stadium or theme park switching to an inferior commerce solution solely to save a few basis points,” he said.
“We want to win as much as we can, deploying the fewest dollars with the absolute highest returns,” Isaacman said. “This is because we were never coddled by [venture capitalists]. We never took on any outside capital our first year 15 years in business.”
“If we wanted to hire employees, invest in a project, or acquire an asset, we funded it with our own cash flows,” he said.
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He told investors that he would rather deploy capital on high probability outcomes “than throw it at digital marketing mass hiring and hoping for the best.”
“At Shift4, we are simply forged differently,” Isaacman said.
Shift4 is scheduled to report earnings next month and investment firms have been adjusting price targets on or initiating coverage of the stock.
BTIG analyst Andrew Harte raised the firm’s price target on Shift4 Payments to $105 from $90 and affirmed a buy rating on the shares.
Despite the stock’s 27% appreciation to date during the second half, it has room for upside as the company should be able to maintain a high-teens-percent organic-growth profile as it executes across several key growth initiatives, the analyst said in a research note.
Shift4 should accelerate the pace at which it improves the monetization of customers across its platform, while its international growth is still in early innings, BTIG added.
Barclays initiated coverage of Shift4 Payments with an overweight rating and $120 price target.
Although the stock’s volatility “can test investor patience,” Shift4’s 25%-plus net revenue growth rate and 49% Ebitda margins, plus a global partnership with SpaceX’s Starlink broadband service, “can reward investors over the long term,” the investment firm said.
Oppenheimer initiated coverage of Shift4 Payments with an outperform rating and $109 price target, offering 27% upside potential.
Shift4’s integrated payments capabilities and acquisition strategy should continue to drive share gains in its core verticals of hotels and restaurants, growth in new verticals, and expansion internationally, the firm said.
Oppenheimer called Shift4 its top small-to-mid capitalization idea.
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