Payments star’s crash highlights investor myopia

LONDON, Aug 18 (Reuters Breakingviews) – European tech star Adyen’s (ADYEN.AS) the collapse of share prices reveals the short-termism of investors. On Thursday, the 50 billion euro Dutch payments company reported an EBITDA margin of 59% for the first half of the year, below analysts’ expectations of more than 60%. Increased hiring and rising staff travel costs are to blame. Poor news on profitability overshadowed a racy 37% year-on-year rise in revenue to €609m over the six-month period. Shares of Adyen fell 12%.

The message is that investors are less interested in revenue growth, especially if it comes at the expense of short-term earnings. Adyen’s still-inflated valuation of 51 times 2022 EBITDA even after Thursday’s plunge leaves little room for error. That’s roughly double the multiple market awards given to industry peers like Visa. (NV)MasterCard (MAN) and PayPal (PYPL.O). Still, Adyen might be right to expand at a time when the rest of the sector is retrenching. Hiring more engineers to create new products could help it diversify away from a historical reliance on tech giants like Uber Technologies (UBER.N) and Netflix (NFLX.O). Adyen stuck to its long-term guidance of a 65% EBITDA margin, implying that the first-half decline is temporary. Profit-hungry investors may lose sight of the long term. (By Karen Kwok)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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