Ayden's stock price plunge to April 2020 low following weak H1'23 results

Adyen’s H1’23 results saw its stock plummet by close to 40% on Thursday. On Friday, its extended those losses, hitting its lowest level since April 2020. The Dutch payments provider which was once a favourite in the European tech sector, reported weak earnings thus triggering concerns over its valuation.

Adyen’s weak H1’23 results

Ayden, one of Europe’s largest payments companies, reported a 10% decline in earnings before interest, taxes, depreciation, and amortization (EBITDA) year over year. This is in addition to a major slowdown in sales.

According to the firm, some of its clients - especially those in the US - have been keen on optimizing costs as opposed to boosting growth. This is largely attributed to high interest rates and high inflation. As a result, some have opted for cheaper competitors that provide “savings over functionality”.

Ayden manages payments for major companies such as Uber, eBay, Subway, and Microsoft. Even with the aforementioned “threat”, the firm has been focusing on its long-term growth goals.

On the one hand, its organic growth and steady investments have been beneficial to the company. Even so, high costs and weaker sales yielded a decline in its EBITDA margin from 59% in the first half of 2022 to 43% in H1’23.

The market’s response to Ayden’s recent results was a rather dramatic rerun of the recorded 16% decline in its stock price six months ago. This is after it hired a larger workforce than expected. In the first six months of 2023, its workforce grew by almost 15% to 3,883.

The Dutch payments company expects its current investment phase to be completed next year. This may yield a significant improvement in margins as its clients return to growth mode. However, the anticipated recovery could be stalled by heightened competition.