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Oct 25 (Reuters) – Worldline’s shares shed more than half of their value on Wednesday after the French payments company stunned investors with a cut to its full-year targets, spooking the stocks of rivals such as Nexi and CAB Payments.
Investors have grown increasingly cautious about the sector, where stretched valuations have come under pressure from higher interest rates and fintech funding has dropped sharply.
Shares in Worldline (WLN.PA), which failed to open at first on the Paris stock exchange because of excessive volatility, plunged 58% to a record low by 1107 GMT. The selloff has wiped around $4 billion off the company’s market value, according to Reuters calculations using LSEG data.
“While a macro slowdown was already incorporated in our recent estimates, the cut in the guidance (totally unexpected in this magnitude) and the issue on German merchants completely change WLN equity story,” analysts at Mediobanca Securities said in a note to clients seen by Reuters.
Worldline’s competitors came under pressure too, with Italy’s Nexi (NEXII.MI) down 20.4%, the second biggest faller on the STOXX 600 and set for its worst daily fall since March 2020.
Meanwhile, shares in CAB Payments (CABP.L) shed 9.5%, having already plunged more than 70% on Tuesday after the London-listed company lowered its full-year revenue forecast.
Dutch payments firm Adyen’s (ADYEN.AS) shares were down more than 11% to a four year low. The stock plunged over 50% in August when weak earnings stoked investor concerns.
“”It is a market that has been in a bubble,” said Jerome Legras, managing partner and head of research at Axiom Alternative Investments.
Worldline said it had severed ties with some of its merchants to reduce risks “in light of an increase in cybercrime”. It did not name the merchants.
“We face now more challenges than we anticipated even until very recently,” Worldline CEO Gilles Grapinet told analysts.
He said the economic downturn in Europe was reducing discretionary spending by shoppers, while increased regulatory scrutiny had an impact on its merchant risk policies.
Worldline said it now sees organic sales growth in 2023 of between 6% and 7%, compared with 8% to 10% previously. It also forecast a 150 basis point (bp) drop in its operating margin before depreciation and amortization for 2023, compared with a previous forecast for a 100 bp increase.
“These results are a disappointment in terms of the full-year miss and also that long-term targets have been discarded,” JPMorgan analysts said.
Online payment companies, which include the likes of PayPal (PYPL.O), have seen their business impacted by the slowing economy, particularly in Europe.
Recession fears are rising in the euro zone, with PMI figures on Tuesday showing business activity taking a surprise turn for the worse this month as demand fell across the region.
Reporting by Lina Golovnya; Editing by Silvia Aloisi, Helen Popper, Amanda Cooper and Alexander Smith
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