Adyen share price forecast: don’t buy the dip yet

Adyen (AMS: ADYEN) share price sell-off gained steam on Friday as concerns about the fintech industry continued. The stock plunged by more than 40% on Thursday after the firm published weaker-than-expected financial results. This decline continued on Friday as it dropped to the 2020 low of €855.

Adyen growth concerns remain

Financial technology companies are under intense pressure as their growth slide. We recently wrote about PayPal, whose shares have plunged by more than 70% from its all-time high. 

Adyen, a company that offers payment services, is also facing a lot of pressure as evidenced by the recent financial results. It processed €426 billion in the first half of the year, an increase of 23% from the same point in 2022.

At the same time, its net revenue rose by 21% to €739 million while its EBITDA dropped by 10% to €320 million. The company cited its growing wage bill for this margin compression. It committed to continue growing its workforce since business is still growing.

Adyen also cited the difficult macro factors for its underperformance. For example, the management cited the rising interest rates, which pushed many enterprise companies to  prioritise cost optimisation.

Investors are starting to worry whether Adyen – and companies like PayPal – should attract a premium valuation. In Adyen’s case, the company is valued at over €26.7 billion value. If the company’s revenue jumps by 20%, it will generate over €2.6 billion this year after making €2.49 billion in 2022.

The other challenge is that Adyen’s growth trend will likely be a bit slow in the future. For one, most large enterprises already have their providers. The biggest providers are Square, PayPal, and Stripe.

Further, there is the challenge that consumer spending will ease as mortgage rates and credit card interest rates jump.

Adyen stock price forecast

The weekly chart shows that the Adyen share price has been in a strong bearish trend in the past few weeks. It moved below the important support at €1,138, the lowest level on June 20th. The shares have retreated below the 50-week moving averages.

Adyen’s Relative Strength Index (RSI) moved below the oversold level of 30. Therefore, there is a likelihood that the shares will continue falling as sellers target the next key support level at €573, the lowest level in September 29th. A move above the resistance at  €1,138 will invalidate the bearish view.