PayPal Rival Adyen Surges 90% in IPO

Adyen NV, a payments processing company which lists tech giants like Netflix Inc. (NFLX), Uber Technologies Inc., Facebook Inc. (FB) and Spotify Technology SA (SPOT) as customers, hit the public market on Wednesday trading on Amsterdam’s Euronext. The Dutch financial technology company, which stole eBay Inc. (EBAY) as a customer from PayPal Holdings (PYPL) earlier this year, saw its shares surge a whopping 90% at close, reflecting a strong vote of confidence from the Street that the twelve-year-old company can shake up the payments sector. 

(See also: Buy PayPal on $110T Payments Market Opportunity: Stifel.)

Payments Processors Double Down on International Growth

The payments processor’s initial public offering (IPO) marked one of the largest in Europe this year. Shares were priced at 240 euros in an offering that was “multiple times oversubscribed,” according to Adyen. With the stock trading around 452.55 euros on Thursday morning, Adyen now has a market value of roughly 13.5 billion euros, or $15.8 billion, according to Bloomberg data. 

Adyen, while still much smaller than its U.S. rival PayPal, which just recently crossed the $100 billion market capitalization threshold, has been doubling down on its international expansion. When Adyen struck a deal with online auctioneer eBay to be its “primary partner” for payments efforts, it ended what was a 15-year partnership with Silicon Valley digital payments pioneer PayPal. San Jose, Calif.-based PayPal has also been focusing on its global reach, buying out Swedish rival iZettle just before it was set to list in Stockholm. 

In the most recent quarter, Adyen boosted revenue by 54% to 1 billion euros. Unlike many of its peers in the tech world, the company has managed to sustain profitability, posting 71.3 million euros in net income in 2017. In a recent note, Susquehanna applauded Adyen for its adjusted EBITDA margins, indicating that it sets the firm apart from competitors. 

“Our checks suggest that Adyen’s platform is modern and fully integrated, meaning more efficient and better customer experience,” wrote Susquehanna analyst Jamie Friedman. As the European firm targets large global merchants and continues to post near-triple digit growth, Friedman says Adyen “appears to be competing effectively against companies such as PayPal,” as well as Global Payments Inc. (GPN) and WorldPay Inc. (WP). Other competitive advantages include its “tapestry of local banking charters” and a banking license in Europe received last year, which enables the firm to provide “enhanced performance and reliability” to its clients. 

(See also: eBay May Be Better Off Without PayPal: Wells Fargo.)

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