Trading in Adyen shares briefly halted after 25% price loss

Trading in Adyen shares was briefly halted on the Amsterdam stock exchange on Thursday. The move followed a share price loss of 25 percent. That is the largest ever daily loss for the payment company, which has been listed on the Amsterdam stock exchange since 2018. The company’s very disappointing results caused the price drop. After the short trading break, the loss continued to mount. At around 11:35 a.m., the stock price had plummeted nearly 27 percent.

Payment processor Adyen grew less rapidly in the first half of 2023 than experts expected. The Amsterdam company, which handles payment transactions for companies like McDonald’s and Hennes & Mauritz (H&M), has seen wage costs rise because it hired more people. Net sales growth in the first half was also negatively impacted by higher inflation and interest rates and increased price competition in the industry.

Adyen processed 426 billion euros in payments in the first six months of the year, which was 23 percent more than in the same period last year. With that, the company achieved a turnover of 739 million euros, an increase of 21 percent. Both transactions and turnover were lower than analysts had expected. Net sales growth in North America was particularly disappointing, more than halving to 23 percent.

Profit before interest costs, taxes, depreciation, and write-offs decreased by 10 percent to 320 million euros. That was also lower than expected. The profit margin was 43 percent, while analysts had counted on a margin of over 48 percent.

Adyen expanded its workforce by approximately 1,150 employees last year and has indicated that it intends to hire a similar number of people in 2023 in preparation for its next growth phase. The company is, therefore, sailing a different course than large tech groups like Amazon, Google, and Facebook. They announced mass layoffs this year.

In the first half of this year, Adyen appointed 551 new people, which means that it now accounts for 3,883 full-time jobs. The company expects that the rapid growth in personnel will gradually slow down from the beginning of next year.

“Adyen was one of the favorites of investors for a long time, the company always had very good profit margins. Now the margins are disappointing, and there is a profit warning, together with disappointing figures. Investors weren’t expecting that, and everyone now wants to get out at the same time,” Cees Smit, investment expert at Today’s Group, explained the fall in Adyen’s share price.

He pointed out that the share had risen very fast in recent years, which means that many investors are still profiting, even after Thursday’s fall. “If you had joined five years ago, you are still 106 percent in the plus today,” Smit said. “But if such a share gets a push, it suddenly goes very fast. Unfortunately, that’s how it goes with darlings.”