Stripe Rival Adyen Sees A Massive Plunge In Share Value Amid Weak H1 Results

The shares of Adyen, a European payments giant that competes against Stripe, witnessed a massive plunge on Thursday, dropping by over 30%. The poor performance in shares happened after the company posted weak revenue numbers, as it also defended the massive recruitment drive that ballooned costs.

Adyen posts a massive decline in share value

The company’s stock dropped to EUR413 shortly after the H1 results were posted from EUR1059. However, a slight recovery has since been seen, with the stock gaining to EUR881. The plunge in share value wiped over EUR12 billion off Adyen’s market value.

Adyen reported that the net revenues posted for the first six months of 2023 came to EUR739.1 million, a 21% increase compared to the previous period last year. However, this figure remains below analyst estimates. During the period, the company also posted a decline of 10% in the EBITDA compared to the previous figure of EUR320 million.

The European company also noted that the North American market had witnessed sluggish growth. The company posted a 23% increase in net revenue, a significant increase from the 52% increase reported during the previous year.

The company noted that the additional factors that had affected growth included strong competition in the market as it battled other fintech firms such as PayPal and Strike. However, the financial results have affected analysts’ estimates of the company’s future performance.

A report by Reuters noted that analysts from JPMorgan had disapproved of the poor financial performance. These analysts had said that the financial results were disappointing, given that the firm had also missed sales. The analysts noted that the main issue that needed to be considered was whether the company would revert to mid-term trend growth.

Increased costs amid hiring spree

The negative financial results can also be attributed to a hiring spree at the company. The company hired an additional 551 employees, out of which 75% served across technology units. The new hiring spree has increased the total workforce at the company to 3,883.

The recruitment drive done by the company in the first six months of the fiscal year added to a headcount of 757 employees. The hiring spree differed from other industry players working on reducing costs. Concerns about high costs have intensified because of the poor global economic outlook.

In 2024, the company will take another approach and hire employees as needed. According to a shareholder letter, the company’s growth will not be linear. The letter also said that while the company posted a decline in net revenue growth, it did not witness any significant developments that affected its mid-to-long-term plans.

The firm also anticipates that its business model integrating high operating leverage will be launched as the company transitions from the accelerated investment phase seen in 2024.