ADYEY - Adyen: Weakness Gives Investors Another Bite Of The Cherry

2024-05-09 02:34:02 ET

Summary

• Post 1Q24 business update, Adyen stock is back to levels seen prior to the 2023 result was released.
• There are genuine concerns about the falling take rate and growth at the low end of guidance, but the company seems unfazed, with eyes on the future.
• I updated my valuation, which now offers a 14% margin of safety to current stock price.

At the start of February, I initiated research on Adyen (ADYEY), arguing that despite an aggressive bounce from the lows of a year ago, there was still value to be found in the payment processor's stock. We were quickly rewarded when the H2 2023 business results were released, with investors seeming very enamoured with the strong margins that were quickly approaching the 2026 target levels of 50%, potentially well ahead of schedule. The EBITDA margin of 48% for the half was enough for investors to overlook the fact that CEO Ethan Tandowsky said that for 2024, net revenue growth is likely to be at the low end of the guided range, which was to "to grow net revenue between the low-twenties and high-twenties percent"....

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