Now trailing at a 45% discount to last Thursday’s share price, Adyen faces a near-Sisyphean struggle to recover its gutted market values, according to analysts at Jefferies.
Shares in the Dutch payments multinational were chopped following last week’s record losses, with fears of tight market competition in the US and an overloaded workforce adding to a bearish outlook.
Adyen missed its last three results along with failing to provide confidence into near-term recovery, noted Jefferies, culminating in a rebasement of growth expectations.
The investment bank has reduced the multinational’s three-year compound annual growth rate in underlying earnings from 27% to just 15%.
“We now expect shares to be range-bound until better visibility of stabilisation of the indicated share of wallet losses,” said Jefferies. “In addition, given the lower scale, we expect now a more modest margin recovery.
“We expect headwinds from eBay normalisation and digital enterprise merchants to continue,” said Jefferies.
A fall in sales volumes at eBay, one of Adyen’s cornerstone clients, was a major catalyst for Adyen’s earnings miss.
Despite the headwinds, Adyen has some positives too, primarily that the group added market share in the e-commerce and non-US in-store payments segments.
It is on track to generate around €700 million in core cash in the second half, leaving core cash at €2.8 billion at year-end while running “one of the most efficient platforms”, said analysts.
Adyen stock was cut to a 'hold' rating with an €850 price target, even with Monday afternoon’s spot price.