PayPal Rival Fintech Adyen Faces Investor Confidence Test

For years, Dutch payments fintech Adyen NV’s founders and management ran things their own way, thanks to some blowout growth.

During its listing in 2018 they didn’t feel the need to pre-brief investors — the shares doubled in the first two hours of trading all the same, making one of the founders an instant billionaire. There was no sounding of the traditional opening gong by management at the start of trading. After going public, the corporate suite kept a low profile, reporting results every six months and never awarding dividends.

Five years on, with growth slowing and the stock trounced, losing 57% in just the last three months, what were once seen as quaint and idiosyncratic ways are now being questioned, and investors are demanding a clear blueprint for how Adyen can get its mojo back. The company, which counts the likes of Cathie Wood’s Ark Investment Management and Singapore’s state investor Temasek Holdings Pte among shareholders — will need to reassure investors that it has a plan for growth in a cooling market with intensifying competition when its top brass briefs them in San Francisco on Wednesday.

“Investors will need to leave the investor day feeling more confident, which could mean the stock just stays where it is, which, in our view, is fairly appropriately valued,” said Craig Maurer, managing director at Financial Technology Partners, an investment banking firm focused on fintechs. “I think there’s more downside risk than upside risk actually, because as they showed on their earnings call, they didn’t exactly speak to investors on the level or with the humility that investors were hoping for, which is something that will need to change for confidence to be rebuilt.”

With the rout in the seven biggest payments stocks in the world erasing about $65 billion this year, the fintech sector is under pressure. The cooling of the online boom that once boosted such companies during the pandemic and the tightening of consumer purse strings because of higher inflation and interest rates suggest the end of the tunnel is not yet in sight for the industry. For Adyen, which still trades at about three times the earnings multiple of longer-established rival PayPal Holdings Inc., the pressure is particularly intense.

Payment Stocks Slump