We came across a bullish thesis on Shift4 Payments, Inc. (FOUR) on Substack by PatchTogether Investing. In this article, we will summarize the bulls’ thesis on FOUR. Shift4 Payments, Inc. (FOUR)’s share was trading at $84.58 as of March 28th. FOUR’s trailing and forward P/E were 27.91 and 17.76 respectively according to Yahoo Finance.
A businessman at a smart POS terminal, demonstrating contactless payment methods.
Shift4’s stock has declined by 20% following its announcement of a $2.5 billion acquisition of Global Blue, a leader in tax-free shopping and currency exchange payment solutions. The deal, funded through a mix of cash and revolving credit, has raised concerns over its financial impact and long-term value. However, a closer look at the numbers suggests it could be a transformative move for Shift4. On an EBITDA basis, the acquisition appears reasonable, with Global Blue contributing approximately $190 million in EBITDA, implying a 13× acquisition multiple. Expected synergies of $70 million by 2027 could push EBITDA to $260 million, reducing the multiple to around 9.5–10× EV/EBITDA. While free cash flow metrics indicate a less attractive 20× multiple, the acquisition aligns with Shift4’s strategy of entering new markets, enhancing capabilities, and driving cross-sell opportunities within acquired networks.
Global Blue provides Shift4 with a significant new revenue stream. The company generated approximately €422 million ($450 million) in revenue for FY2023/24, and once the deal closes in Q3 2025, Shift4’s topline will benefit immediately. More importantly, Shift4 can cross-sell its payment processing services to Global Blue’s 400,000+ merchant locations, unlocking a major growth avenue. Global Blue currently relies on acquiring partnerships for payment processing, handling roughly €28.3 billion ($30 billion) in transactions annually. If Shift4 captures even a portion of that volume at its 0.8% standard take rate, it could generate up to $240 million in new revenue. Additional high-margin opportunities exist in cross-border payments and currency conversion services such as Dynamic Currency Conversion (DCC) and Multi-Currency Pricing (MCP). Shift4’s existing network of hotels and resorts can integrate Global Blue’s DCC services, allowing international guests to convert their payments into their home currency at checkout. If just 3% of estimated 2025 transactions ($200 billion) utilize DCC with a 2% FX spread, Shift4 could generate over $100 million in additional revenue.
The acquisition also strengthens Shift4’s positioning in the restaurant and entertainment sectors. Its extensive network of restaurants, casinos, and stadiums can implement multi-currency options, improving customer experience while capturing additional revenue. Luxury retail presents another opportunity—Global Blue’s partnerships with brands like Prada and Louis Vuitton position Shift4 to provide unified commerce solutions that bundle payment processing, eCommerce, and tax refunds, differentiating it from competitors such as Adyen and Stripe. Additionally, the acquisition expands Shift4’s geographic footprint, particularly in Europe and Asia, where it previously had limited exposure. With nine new countries expected to adopt tax-free shopping, the transaction volume potential increases further.
However, the deal also introduces financial risks. A $1.8 billion bridge loan will finance part of the acquisition, increasing Shift4’s leverage and putting pressure on cash flows. Higher interest rates in a downturn could drive up expenses significantly, and if expected synergies fail to materialize, financial strain could follow. To mitigate this risk, Shift4 must prioritize refinancing the bridge loan with long-term debt as soon as possible.
Despite these risks, Shift4’s cash flow outlook remains strong. Over the past year, the company generated $500.3 million in cash from operations, with an adjusted free cash flow of $380.8 million. Management has guided for 25% annual growth over the next three years, which could drive cash flow to $744 million by 2027. With Global Blue’s integration, EBITDA and gross revenue could exceed a 30% compound annual growth rate. By 2027, Shift4’s total debt load, including Global Blue’s term loan, will likely reach $3.52 billion, with estimated interest costs of $237 million annually. Subtracting this from projected cash flow leaves an estimated owner’s cash flow of $507 million. At current trading levels, Shift4 is valued at approximately 15× its projected 2027 earnings, with upside potential if growth targets are met. In the best-case scenario, Shift4 successfully integrates Global Blue, captures a meaningful share of payment volume, and realizes its synergy targets, driving stock re-rating.
Shift4 Payments, Inc. (FOUR) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held FOUR at the end of the fourth quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of FOUR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FOUR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.