Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access both of our platforms from a single Saxo account.
Quick take: Payment stocks plunge on Worldline outlook
Peter Garnry
Chief Investment Strategist
Summary: Payments stocks are under pressure today as Worldline shares plunge 57% as the company is downgrading its fiscal year organic revenue growth adding question marks to long-term expected growth rates in the industry. Equity analysts have been remarkably wrong on their views on the payments industry and one key threat in the industry might be Apple Pay.
Key points in this equity note:
- Payments stocks are hit today as Worldline shares plunge 57% on fiscal year downgrade of organic revenue growth adding question marks to long-term expected growth rates in the industry.
- Our payment equity theme basket is among the worst performing themes in the equity market the past year down 6% whereas the global equity market is up 14%
- Apple Pay is a potential explanation for why the market is structurally getting nervous about long-term growth and profitability of the payments industry.
Payment stocks are getting uglier and uglier
First is was Adyen shocking the market in August with declining EBITDA and worse-than-expected outlook sending its shares down 39% on the day (they have since declined another 29%). Today, it was the French-based payment company Worldline that reported lower than previously indicated organic revenue growth for 2023 at 6-7% vs 8-10% blaming it on deteriorating macro environment in particular in Germany. Worldline shares are down 57% today taking down other payment stocks such as Adyen down 7%. Our payments equity theme basket is also among the worst performing baskets the past year down 6% vs the MSCI World Index up 14%. Our data also suggest retail investors are massively buying the dip here across many of these payment companies.
How can such a small downgrade move an entire industry this much? What are analysts missing? Earlier this month a leading investment bank said about Adyen that it is a great business. Since Adyen lost its trust with investors in August the stock price has declined and the company has kept quiet saying it will make a business update November 8, 2023 at their Investor Day 2023. What is taking so long? One thing is for sure, Adyen’s revenue growth target of +25% is dead with today’s news from Worldline, but the question is what is the new structural growth rate?
Observing this meltdown in payment stocks with very little concrete reflection among equity analysts one has to wonder what is really going on. One explanation is provided in a Barron’s article back in July saying that Apple Pay’s increasing popularity is a big problem for PayPal and thus maybe also the wider payments industry. Could it be that Apple Pay over time will take over the digital payment infrastructure. Recently Apple ventured into buy-now-pay-later and is constantly adding new features to their wallet and Apple Pay solution. The threat from Apple should be a key consideration for any investor before piling into these falling payment stocks.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...