Payments giant Adyen lost 40% of its market value overnight. Here’s why Christmas came early this year 🎅
FinTech is Eating the World, 18 August
Hey Everyone,
TGIF! What a week it was… 🤯 Today’s issue is also a special one as we’re taking a very close look at Adyen. The FinTech giant just lost 40% of its market value, but it might actually be your early Christmas present (bonus is a deep dive into Adyen + latest analysis of other important FinTech companies). Let’s jump straight into the intriguing stuff 🌶
Payments giant Adyen lost 40% of its market value overnight. Here’s why Christmas came early this year 🎅
The (shocking!) news 🫣 Payments heavyweight and Europe’s FinTech darling Adyen dived more than 40% on H1 earnings wiping out over 3 years of gains and bringing the stock close to pre-covid highs. Ouch 🤕
If that wouldn’t be enough, trading in Adyen shares was briefly halted on the Amsterdam stock exchange on Thursday. The move followed a share price loss of 25% marking the largest ever daily loss for the payment company, which has been listed on the Amsterdam stock exchange since 2018. That’s brutal…
But are things really that bad? Maybe markets are just overreacting?
Let’s take a closer look at this and unpack what could be your early Christmas present 🎁
The numbers 📊 Let’s start with the numbers. Here are the key highlights from Adyen’s H1 2023:
Net revenue increased by 21% or 19% in constant currency.
Processed volume was up 23% year-over-year (YoY).
EBITDA, on the other hand, decreased by €36M YoY mainly due to the addition of 551 full-time employees. Wages increased to €247M from €134M a year earlier.
The combination of weaker sales and higher costs led to an EBITDA margin of 43% in the first half of 2023, down from 59% in the same period of last year and worse than analysts expected.
Interest income was €93M compared to €1.4M last year, so the higher wage costs were almost offset by interest income.
***Note: Adyen changed the way it recognizes gross revenue this half year, but the number it has used for reporting has always been net revenue, so this should not be a cause for concern.
So what happened? 🤔 In short, Mr. Market has overreacted. If you have read the shareholder letter and listened to the earnings call, it’s clear that the management is focused on the long term, which is a good sign for long-term investors.
The investors (institutional?) punished Adyen due to FinTech being quite richly valued. Hence, the stock has pretty much collapsed…
Nevertheless, Adyen is doing more than fine looking at the long run while management making decisions with a long-term vision makes them a company you now must have on your watchlist.
In fact, I’d argue that it’s now your perfect early Christmas present. Here’s why👇🏼
+ you’ll also unlock a deep dive into Adyen, a recent full analysis of Nubank & dLocal, a closer look at the latest performance from PayPal, Block, and more!