Recent market entrants Adyen [ADYEN.AS], Darktrace [DARK.L] and Nexi [NEXI.MI] have all struggled in the past year as global tech stocks fall out of favour with investors. Fears about rising interest rates and muted consumer demand have wiped out most of the growth fintech and IT shares made in 2021.
The fintech sector, in which both Ayden and Nexi operate, has had a particularly dire start to the year. Cathie Wood’s ARK Fintech Innovation ETF [ARKF] has fallen 66.2% in the past year to 27 July. While the cybersecurity sector, in which Darktrace operates, has performed better than fintech, the First Trust Nasdaq Cybersecurity UCITS ETF [CIBR] is still down 15.7% over the past year.
Shares in Italian bank Nexi, which focuses on creating payment solutions for businesses, have seen the largest fall out of its peers, declining 36.9% since the start of the year. Meanwhile, Dutch payment company Adyen, which offers similar services, is down 27.6%. In contrast, cybersecurity firm Darktrace’s share price has dropped by a comparatively smaller 15.8% this year.
Adyen sees 70% growth in payments
Despite seeing its share price struggle over the last few months, Adyen has seen some impressive growth figures in the last year. The company processed €516bn in payments throughout 2021, which represented a staggering 70% growth from figures seen in 2020.
The company, which provides end-to-end payment systems for the likes of Uber [UBER], Spotify [SPOT] and Booking.com [BKNG], also saw strong earnings growth. Adjusted EBITDA for 2021 rose 57% in 2021 to €630m as online consumer spending remained high.
The Adyen share price sits in the middle of the pack when its 2022 performance is compared with Darktrace and Nexi. However, looking at a longer time frame, Adyen has seen the strongest performance since its listing in the summer of 2018. The share price is up 318.2% since its IPO in June 2018, closing at €1,673 on 27 July.
Out of 19 analysts interviewed by The Wall Street Journal, 12 currently have a ‘buy’ rating for the company, two ‘outperform’ and the remaining five have a ‘hold’ rating. The average share price target from these analysts is €2,133, which represents a 27.5% premium on the Adyen share price as of 27 July.
Nexi share price falls back to IPO listing
Italian fintech group Nexi has existed for decades in several different forms. Nexi, originally known as ICBPI, was first founded in 1939 by six Italian cooperative banks. The company shifted towards the payments industry through a series of acquisitions from 2006 to 2017. After renaming itself Nexi in 2017, the company floated publicly in 2019. Since then, two mergers with payment companies SIA and Nets transformed the company into one of Europe’s largest fintech groups.
However, since its listing in 2019, the Nexi share price has gone nowhere. After reaching a high of €18.89 on 29 July 2021, the share price has since fallen back to its IPO price of €9, closing at €8.83 on 27 July. Nexi has dramatically underperformed the likes of Darktrace and Adyen.
However, Nexi saw revenues for 2021 rise 10% from the previous year to €2.27bn on the back of strong growth for card and digital payments in Italy and the rest of Europe. EBITDA for the year saw a growth of 12.1% to €1.09bn.
Looking ahead, the company will likely be hurt by a drop in discretionary consumer spending as the cost of living crisis grips Europe. This will harm payment volumes and possibly reduce revenues over the next few years. These fears can be partly to blame for the recent performance of the Nexi share price.
Darktrace reverses its losses in July
The UK-listed cybersecurity company has seen its share price slashed by over half its value since October 2021. Darktrace shares reached a 52-week high of 1,003p in September last year before falling dramatically to close at 353.70p on 27 July — a 63% decline. The share price has suffered from ongoing legal disputes, as well as overvaluation fears.
However, since the start of the month, the Darktrace share price has lifted 20.1%, reversing its losses since hitting a 52-week low of 281.3p on 5 July. This has been helped by a promising Q4 trading update on 19 July, which revealed a 32% growth in customer numbers year-over-year and 48% increase in revenue. The company also gave strong guidance for 2023, with revenue growth of 29–32% expected for the full year.
On the back of these good results and lower valuation, analysts are looking favourably on Darktrace. Of eight analysts interviewed by The Wall Street Journal, six rate it a ‘buy’, one a ‘hold’ and only one a ‘sell’.