Adyen doubles in debut in year’s biggest European tech IPO

Bloomberg

Adyen NV, a Dutch payments processor whose clients include Netflix Inc. and Spotify Technology SA, more than doubled in its trading debut in Amsterdam.
The shares, which priced at 240 euros apiece in Europe’s biggest technology public offering of the year, reached 503.90 euros early on Wednesday, before retreating to 436.55 euros by 1:10 p.m. local time. Adyen’s market value of 12.8 billion euros ($15.1 billion) already exceeds some long-established financial companies, such as Commerzbank AG.
Adyen is one of a new breed of financial technology firms challenging the big banks and credit card issuers which have long controlled systems for processing payments in stores and online. With a roster of A-list clients, from Facebook to Uber, Adyen generated more than 1 billion euros in revenue in 2017. It made headlines this year by becoming EBay Inc.’s payment processor, replacing PayPal Holdings Inc.
“Everybody thinks this will be the great winner in fintech, so people pay for that,” said Jos Versteeg, senior equity research analyst at InsingerGilissen Bankiers NV. But given the current multiple to earnings, “this is more speculating than investing,” he said.
The share surge is the more surprising because Adyen’s initial public offering — the third-largest in Europe this year — came after several companies struggled to sell stock amid market turbulence and political uncertainty. Issuers in the region raised about $23 billion and postponed or withdrew IPOs worth close to $6 billion, according to data compiled by Bloomberg. For some, the share surge suggests another tech bubble is brewing, this time among financial technology firms. At its current price, Adyen is trading at almost 100 times its projected 2018 Ebitda, or earnings before interest, tax, depreciation and amortisation.
“This company has to grow very fast” to meet the expectations of its current stock valuation, said Versteeg. “When a quarter disappoints, the stock will immediately fall.” Not everyone agrees. Mark Tluszcz, managing partner at Luxembourg-based venture capital firm Mangrove Capital Partners, said Adyen’s valuation is “completely justified given what they’ve done and the kind of business they’ve built.”