Investment Review day 27 of 50: Adyen $ADYEY
Adyen is a fintech company that provides merchants with a single platform to accept e-commerce, mobile, and point-of-sale payments in multiple countries using nearly 300 different payment schemes and methodologies worldwide. Adyen’s payment platform is ideal for large multinational enterprises, and its customers include some of the world’s most recognizable brands, including McDonalds, Facebook, Microsoft, Uber, Spotify, Netflix, H&M, Ebay, and Airbnb.
The company’s strategic focus on quality and customer service is a key driver of growth, with over 80% of new revenue coming from existing customers, as they realise that they can achieve the highest levels of payment authorisation with Adyen, minimising the revenue loss that can result from incorrectly declining a payment (while circa 97% of face-to-face payments are accepted, as an industry benchmark, up to 15% of online payments may typically be declined).
I purchased stock twice in early 2023, and had the opportunity to add a third time in August when the valuation was hammered as a result of missed estimates in payment volume and revenue growth, and lower profitability as a result of increased hiring and upfront investments in infrastructure. Although the market was soured by the company’s seemingly spiralling costs, I saw this as an investment in future growth made by a confident leadership team, and used the opportunity to ‘dollar cost average’ into my position. You really need to understand your investment thesis before you break the cardinal rule of ‘watering your weeds’ (!), but that third purchase is up over 75% as of today, showing that this strategy can work, when applied judiciously.
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I’m putting my holdings under the microscope. Over the next 50 days I’ll break down my whole investment portfolio. Wins, losses, and the ‘why’ behind it all. And on day 50 I’m going to share my full portfolio so you can see how my strategies played out in the real world over the last twenty years and what we can all learn together. Follow along for the journey! #StockAnalysis #50daychallenge #fintech #wateringweeds #DCA #dollarcostaverage
