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 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 technology firms challenging the big banks and credit card issuers who have long controlled systems for processing payments in stores and online. With a roster of A-list clients, from Facebook Inc. to Uber Technologies Inc., Adyen generated more than 1 billion euros in revenue in 2017. It made headlines this year by winning eBay Inc. as a customer, displacing 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.
Is Adyen bringing us back to the dotcom bubble?
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 amortization.
"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."
Not a Fintech ‘Proxy’
Tluszcz has been skeptical about fintech companies, arguing that the area has been over-hyped and over-funded. But he says he does not see Adyen as representative of fintech as a whole. “Adyen is a payments company, it is not trying to replace financial services or disintermediate banks,” he said. “I don’t think this is a proxy in any way for the future success of fintech."
For the company’s co-founders, Pieter van der Does and Arnout Schuijff, the IPO is the culmination of a decades-long dream. They helped establish one of the first online payment processors, Bibit, back in the 1990s. Royal Bank of Scotland acquired it in 2004.
In 2006, Bibit’s founders checked out to form a new venture -- Adyen -- and this time they had no intention of selling out, Van der Does told Bloomberg in a 2016 interview. By last year, Adyen was processing in excess of $122 billion in payments, an increase of 61 percent from the year before, according to financial filings. The European Union has embraced competition among payments processors to provide more choices for consumers.
Shaking Things Up
“Adyen is proof that even in a traditional and highly regulated industry, building a powerful, global business is possible," said Jan Hammer, a partner at Index Ventures who led the venture capital firm’s investment in the company, in a statement Wednesday.
Adyen’s surge gave a boost to shares of Germany’s Wirecard AG, another Internet payment processor, and France’s Ingenico Group.
Investors including General Atlantic and Index Ventures sold 13.4 percent of the outstanding shares. Adyen won’t receive any proceeds from the IPO, which raised 849 million euros and valued the company at 7.1 billion euros at offer, according to data compiled by Bloomberg.
Morgan Stanley and JPMorgan Chase & Co. acted as joint global coordinators and joint bookrunners for the offering. ABN Amro Bank NV, Bank of America Corp. and Citigroup Inc. were appointed as joint bookrunners.