Shares of Adyen, a payments group, plunged almost 40% following disappointing profits

Adyen’s shares fell almost 40% on Thursday, after a hiring frenzy and the competition from rivals in the US such as Stripe impacted profits at one Europe’s biggest payments companies.

The fall knocked €18bn off the market capitalisation for Adyen. This company has been regarded as one of Europe’s leading tech companies ever since it listed on the Amsterdam Stock Exchange in 2018.

Investors punished the Dutch group for revealing the costs of its hiring spree, which it continued to pursue despite the slowdown in economic growth and the retrenchment of competitors.

Adyen’s earnings in the first six months were €320mn, which was below the €365mn expected. The company’s revenues increased by 21 percent to €739.1mn but fell short the €754mn analyst forecast.

The ebitda of the company was only 43 percent in the first half. This is down from the 59 percent in the same period last year and lower than the 48.6 percent investors expected.

Adyen was founded in 2006 by Pieter van der Does, chief executive, and Arnout Schüijff. The group’s largest market is still Europe, but it has expanded aggressively in other countries, including the US.

In the first half of the year, the company’s workforce increased by almost 15% to 3,883. The company attributed the 80 percent increase in compensation costs to its recruitment campaign and wage increases for current staff.

Ethan Tandowsky, chief financial officer of the group, defended the hires. The hirings came after the company added over 1,000 employees in the past year.

“We said that we would hire the same number of people in 2023 as we did 2022. He said that they would continue to follow through with their hiring plans.

Stripe was founded by Irish brothers Patrick Collison and John Collison in 2010. In November last year, the company announced that it would be cutting 14 percent of its workforce.

Adyen is in competition with Stripe, Checkout.com and other online payment processors. Spotify, Uber, and Booking.com are among its clients.

Adyen shares closed down by 39 percent.

The company’s first half was a brutal one, made worse by the increasing competition in the US. Its revenues in Europe grew by 23 percent to €187.5mn. This is less than half of the growth rate from the same period the previous year.

Van der Does said, “We’ve noticed that merchants were very cost-focused in the past. Now they are trying to find local providers.” It’s not like we’re shrinking, we’re simply growing slower.

Hannes Leitner of Jefferies said that Adyen’s poorer performance in the US was due to aggressive pricing by competitors like Braintree (owned by PayPal) and San Francisco’s Stripe.

He added, “the big question is how will the second half look?” “Seening a substantial slowdown in a key area of growth like the US is something that will cause major concern.”

Hannes Leitner of Jefferies said that the weaker performance of the company in the US was due to aggressive pricing by competitors like Braintree owned by PayPal. Adyen’s US revenue increased by 23 percent year-on-year to €187.5mn. This is less than half of the growth rate in 2022.

Adyen shares are down 36% over the last year. This reflects broader struggles in the industry, where consumer spending is under pressure due to persistently high inflation.

Private competitors’ prices have also dropped dramatically. Stripe’s latest funding round, in March 2013, valued it at 50bn. This is about half of the value it had two years earlier. reduced the valuation of London-based Checkout.com to $11bn in late 2014, after it had been valued at $40bn by January.