Adyen valuation is more realistic but the pressure could continue Adyen valuation is more realistic but the pressure could continue Adyen valuation is more realistic but the pressure could continue

Adyen valuation is more realistic but the pressure could continue

Equities 5 minutes to read
Peter Garnry

Head of Saxo Strats

Summary:  Adyen is down 22% this year as investors are worried that volume growth is coming down hard and will converge faster than expected to the industry leader PayPal. If this convergence is true then the equity valuation of Adyen could continue to be repriced as Adyen is valued at a steep premium to both Block (former Square) and PayPal. Sell-side analysts remain very positive on Adyen with a consensus price target that is 54% above the current price suggesting that the current price level could gather buying activity by investors. Long-term we remain very positive on the payments industry due to its high growth rate and its free cash flow generation, but sometimes good assets can be too expensive.

It has been a tough start to the year for payment companies with our payments theme basket down 4.6% as growth related stocks have been sold off by institutional investors as portfolios have been reallocated in light of rising inflation expectations. Adyen, which has been one of the hottest payment companies in Europe over the past couple of years, has felt the unlove particularly hard down 22% this year. Sell-side analysts have not budged much keeping their consensus price target at €2.758 which is whopping 54% above the current price. However, analysts have very dispersed views on stock with the lowest price target at $1,430 and  the highest at €3,650, suggesting significant disagreement about the company’s value.

Source: Saxo Group

Many have argued that Adyen has been particularly hard hit because of PayPal’s lower growth target and the assumption that the two companies’ volume growth is converging. If the convergence is in fact the true underlying dynamic then Adyen’s expected EBITDA of €1.98bn in FY2025 is still potentially attracting a too high valuation with the enterprise value at €52.4bn which equals a forward EV/EBITDA multiple of 26.5x on FY2025 EBITDA expectations compared to 17.8x for Block (former Square) and 12.4x for PayPal. But the premium on Adyen shares is driven by the higher expected growth rate compared to PayPal, but if the volume growth is converging to PayPal’s then the valuation could slide even further. With €216bn in processed volume in the first half of 2021 up 67% y/y, we are leaning towards the case that Adyen will not see its volume converge to PayPal’s anytime soon.

Adyen reports Q4 earnings on 9 February and the volume growth and especially forward guidance on volume growth will be very important for investors. Adyen must also show that EBITDA margin can continue to expand. Long-term we remain positive on the payments industry which is experiencing rapid technological change and many new players such as Block and Adyen that will take market share over time from the established players in the industry.


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992