Why a Fund Cut $4 Million of Payoneer Stock Despite Record Revenues

On November 14, Charlotte-based Tikvah Management disclosed a sale of 400,000 Payoneer Global Inc. (NASDAQ:PAYO) shares, reducing its position by approximately $3.77 million.

What Happened

An SEC filing, published on November 14, shows Tikvah Management sold 400,000 shares of Payoneer Global Inc. (NASDAQ:PAYO) during the third quarter. The estimated value of the sale, based on the quarterly average price, was approximately $2.68 million. After the transaction, Tikvah Management held 1.29 million shares valued at approximately $7.82 million as of the quarter’s end.

What Else to Know

The sale reduced Payoneer’s weighting to 2.3% of Tikvah Management’s reportable AUM.

Top holdings after the filing:

• NASDAQ:GOOGL: $65.70 million (19.4% of AUM)
• NASDAQ:AMZN: $64.92 million (19.2% of AUM)
• NYSE:CMPO: $41.01 million (12.1% of AUM)
• NYSE:BIO: $31.15 million (9.2% of AUM)
• NYSEMKT:SPY: $22.05 million (6.5% of AUM)

As of Tuesday, PAYO shares were priced at $5.55, down 44% over the past year and vastly underperforming the S&P 500, which is up about 15% in the same period.

Company Overview

Company Snapshot

• Payoneer Global offers a global payment and commerce-enabling platform, including cross-border payments, B2B accounts payable/receivable, multi-currency accounts, Mastercard cards, and working capital solutions.
• The company serves online marketplaces, platforms, and merchants operating in approximately 190 countries and territories.
• It's headquartered in New York City, with a focus on digital businesses and compliance-driven solutions.

Payoneer Global Inc. operates at scale in the global payments sector, facilitating secure and efficient cross-border transactions for digital businesses and marketplaces. The company's integrated platform and diverse service suite position it as a key infrastructure provider for international commerce. Its extensive reach and focus on compliance and digital enablement provide a competitive edge in servicing the needs of global online sellers and marketplaces.

Foolish Take

What’s perhaps most interesting here is the widening gap between Payoneer’s operating momentum and its stock performance. The business is still growing, but investors are clearly debating what that growth is worth. In the third quarter, Payoneer delivered record revenue of $270.9 million, up 9% year over year, while revenue excluding interest income rose 15% as volume climbed and take rates expanded across SMB customers. Adjusted EBITDA, meanwhile, reached $71.3 million, and management raised full-year guidance, now expecting up to $1.07 billion in revenue and as much as $275 million in adjusted EBITDA. Those don’t seem like numbers from a company in retreat.

Yet profits told a messier story. Net income fell sharply to $14.1 million from $41.6 million a year earlier, reflecting higher taxes, rising operating costs, and the limits of operating leverage in a lower-rate environment. Against that backdrop, Tikvah’s trim looks less like a thesis break and more like risk management after a volatile year. Within the fund, Payoneer is now a mid-tier holding, well behind mega-cap anchors like Alphabet and Amazon. For long-term investors, it’s important to consider that Payoneer is executing, but the market wants proof that revenue growth can translate into durable earnings power. And until then, volatility is the price of admission.

Glossary

AUM (Assets Under Management): The total market value of investments managed on behalf of clients by a fund or firm.

Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.

Reportable AUM: The portion of assets under management that must be disclosed in regulatory filings.

Holding: An investment position in a specific security or asset within a portfolio.

Weighting: The percentage that a particular holding represents within a portfolio or fund.

Stake: The amount of ownership or shares held in a company by an investor or fund.

Cross-border payments: Financial transactions where money is sent between parties in different countries.

Accounts payable/receivable: Money a company owes to suppliers (payable) or is owed by customers (receivable).

Working capital solutions: Financial services that help businesses manage short-term funding needs and cash flow.

Integrated platform: A unified system combining multiple financial services or tools for users.

Compliance: Adhering to laws, regulations, and standards relevant to financial operations.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.