The rebound in Adyen NV and its European fintech peers this month has been notable, but investors should brace for a bumpy road ahead.
After a string of profit warnings knocked off €30 billion in combined market value this year, the three European payment processors — Adyen, Nexi SpA and Worldline SA — have been on a recovery path. In just a month, their combined market capitalization increased by more than 50%, helped by reassuring company updates and private equity firms’ interest in the sector.
But risks are growing. Global economic uncertainty adds to the pressure on payment processing companies, which are highly sensitive to consumer spending. Fierce competition to win over merchants in the US is weighing on Adyen’s growth, while a tougher regulatory stance in Europe adds to concerns.
“It’s not like we’ve turned the page immediately,” Jefferies analyst Hannes Leitner said in an interview. Consumer spending trends have held up in the past quarter, but retailers’ expectations are “very cautious” for the fourth quarter, he said.