The 24-Hour Shock: How Adyen's Valuation Dropped by $20 Billion Overnight
- Adyen's shares fell nearly 40% in one day.
- The company has not been this cheap since April 2020.
After the Amsterdam-listed payment company, Adyen (EURONEXT: ADYEN) published financial results last week that disappointed investor expectations, its stock took a significant hit. The depreciation was so severe that the fintech's valuation shrank $20 billion in just one day. In the new week, the declines continue, with share prices falling back to the pandemic lows of April 2020.
Adyen Reports Slowest Revenue Growth in Its History
At first glance, Adyen's report might seem optimistic. The company increased processed volumes 23% year-on-year and increased its net profit €130 million to €739 million. However, analysts and investors were alarmed by a five-fold decline in revenue, which contracted from €3.95 billion to €854 million in the first half of 2023.
The market's reaction was immediate. Adyen shares plummeted nearly 39% on the Amsterdam stock exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term on Thursday, reducing the company's valuation by €18 billion ($20 billion). On Friday, the stock lost another 3%; on Monday, it declined 5%, touching the lowest levels since the start of the Covid-19 pandemic.
Until now, investors have regarded Adyen as a growth stock, consistently reporting an average revenue growth of 26% every six months since its stock market debut over five years ago. This momentum is now clearly disrupted, raising concerns that competitors promoting aggressively cheaper services may negatively impact Adyen's future.
Consumer Issues and Competitive Challenges
When Adyen went public in 2018, many viewed it as a serious competitor to the American payment giant, PayPal. The company, which processes payments for services like Netflix, Spotify, and Meta, serves as a payment gateway and processor, collecting small fees from each transaction.
According to company representatives, many customers began to cut their spending due to high inflation and economic pressure. Fewer transactions by consumers mean less revenue for Adyen.
Adyen's situation is further complicated by competitors offering lower rates than the Amsterdam-based company. Merchants prefer to use smaller, local payment service providers, negotiating more attractive rates with them.
However, Adyen's CEO, Pieter van der Does, has remained optimistic and has tried to reassure investors. He insisted that his company is not downsizing but simply growing slightly slower.
Fintechs in Distress
Globally, fintechs have little reason to cheer. This is evident in Europe, where a significant drop in funding was recorded in the first half of 2023. In the second half of 2022, fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term funding reached $63.2 billion across 2,885 transactions. However, the first half of 2023 saw a decline to $52.4 billion in 2,153 transactions, according to the Pulse of Fintech report by KPMG. These figures indicate a substantial decrease in overall funding and transaction volume.
Another report released in early July by Innovative Finance has confirmed this. By their calculations, total capital investments amounting to $27.3 billion across 1,714 transactions represent a drop of 14% compared to the second half of 2022. Globally, funding in the financial technology sector has fallen 30% this year to $95 billion.
After the Amsterdam-listed payment company, Adyen (EURONEXT: ADYEN) published financial results last week that disappointed investor expectations, its stock took a significant hit. The depreciation was so severe that the fintech's valuation shrank $20 billion in just one day. In the new week, the declines continue, with share prices falling back to the pandemic lows of April 2020.
Adyen Reports Slowest Revenue Growth in Its History
At first glance, Adyen's report might seem optimistic. The company increased processed volumes 23% year-on-year and increased its net profit €130 million to €739 million. However, analysts and investors were alarmed by a five-fold decline in revenue, which contracted from €3.95 billion to €854 million in the first half of 2023.
The market's reaction was immediate. Adyen shares plummeted nearly 39% on the Amsterdam stock exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term on Thursday, reducing the company's valuation by €18 billion ($20 billion). On Friday, the stock lost another 3%; on Monday, it declined 5%, touching the lowest levels since the start of the Covid-19 pandemic.
Until now, investors have regarded Adyen as a growth stock, consistently reporting an average revenue growth of 26% every six months since its stock market debut over five years ago. This momentum is now clearly disrupted, raising concerns that competitors promoting aggressively cheaper services may negatively impact Adyen's future.
Consumer Issues and Competitive Challenges
When Adyen went public in 2018, many viewed it as a serious competitor to the American payment giant, PayPal. The company, which processes payments for services like Netflix, Spotify, and Meta, serves as a payment gateway and processor, collecting small fees from each transaction.
According to company representatives, many customers began to cut their spending due to high inflation and economic pressure. Fewer transactions by consumers mean less revenue for Adyen.
Adyen's situation is further complicated by competitors offering lower rates than the Amsterdam-based company. Merchants prefer to use smaller, local payment service providers, negotiating more attractive rates with them.
However, Adyen's CEO, Pieter van der Does, has remained optimistic and has tried to reassure investors. He insisted that his company is not downsizing but simply growing slightly slower.
Fintechs in Distress
Globally, fintechs have little reason to cheer. This is evident in Europe, where a significant drop in funding was recorded in the first half of 2023. In the second half of 2022, fintech Fintech Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Financial Technology (fintech) is defined as ay technology that is geared towards automating and enhancing the delivery and application of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as a back-end system technology for renowned financial institutions. However, it has since grown outside the business sector with an increased focus upon consumer services.What Purpose Do Fintechs Serve?The main purpose of fintechs would be to suppl Read this Term funding reached $63.2 billion across 2,885 transactions. However, the first half of 2023 saw a decline to $52.4 billion in 2,153 transactions, according to the Pulse of Fintech report by KPMG. These figures indicate a substantial decrease in overall funding and transaction volume.
Another report released in early July by Innovative Finance has confirmed this. By their calculations, total capital investments amounting to $27.3 billion across 1,714 transactions represent a drop of 14% compared to the second half of 2022. Globally, funding in the financial technology sector has fallen 30% this year to $95 billion.