First Read: Adyen "Adyen acquisition of Orb" (Buy) Forsythe

Research evidence excerpt

First Read: Adyen "Adyen acquisition of Orb" (Buy) Forsythe

Forecast returns

Forecast price appreciation 103.8%

Forecast dividend yield 0.0%

Forecast stock return 103.8%

Market return assumption 7.7%

Forecast excess return 96.1%

Company Description

Adyen is a modern payment processor based in the Netherlands, primarily operating in the e-

commerce channel, but also supplying POS and omnichannel solutions. The company has

become well known for its single technology stack and purely organic growth strategy (zero

M&A in its history). It is a full-stack processor with direct connections into the card networks

Visa and Mastercard, as well as a licensed bank in the EU, the UK and the US.

Valuation Method and Risk Statement

Risks in include 1) Further degradation in the eCommerce enterprise pricing environment,

owing to extended periods of high inflation (cost-conscious merchants looking to offload

third-party vendor costs where possible), and continuous pressure via cross-subsidisation by

competition (incremental pricing actions by competitors such as Braintree, Chase, and more)

continuing incrementally (possibly sacrificing net revenue profitability on payments solely for

the purpose of gaining share); 2) Macro pressures causing a significant deterioration in

consumer spending levels given indexation to discretionary goods (i.e., retail eCommerce,

travel, and subscriptions comprising a significant portion of volumes); and 3) increased

competition from other modern processors such as Adyen, Stripe, Checkout.com, Sumup,

and others who have meaningful volumes; 4) Bank technology is a very competitive market,

and it will be difficult for non-incumbents to gain share in new markets, given the