Adyen: Land And Expand (Ticker: ADYEN)

The two recently closed acquisitions will greatly accelerate Adyen's product breadth when competing for enterprises and start-up clients.

The Q3 Emerging Moats schedule has been finalized. The next three research reports will be BBB Foods, Wise, and Toast. Sprinkled in between will be Friday updates on existing stocks in the Emerging Moats universe.

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I wrote 5,000 words on Adyen back in March. Since then, the stock has kept taking on water, with the US ADR down 10% as of this writing. The underfollowed Dutch company has been unusually busy with earnings, executive departures, two acquisitions to expand beyond payment processing (the first two in the company’s history), and a continued refusal to have any common sense over capital returns.

All payment stocks are in the gutter. So much so that Stripe is reportedly making a bid for PayPal at $53 billion, which is less than 10x LTM GAAP operating earnings of $6 billion. Quite the pessimistic price for a levered buyout. I do not know when the sector will turn things around, but with a reasonable P/E and double-digit revenue growth poised to continue, Adyen should deliver strong, inflation-protected gains over the next five years. The only question is how to manage any position in the stock.

On this update, I will cover:

• Steady Q1 results

• Accessing the two acquisitions

• Management changes

• Is there still an emerging moat?

• My investment decision

• Portfolio update

Steady Q1 results