Adyen Closed a Good Full-Year 2020; Issuing a Lucrative Opportunity

Wide-moat Adyen reported full-year 2020 EBITDA figures of EUR 403 million, up 27%. Operating performance in 2020 was good and in line with our expectations. We plan to revisit our forecasts shortly, which may lead to a modest increase in our fair value estimate. While our base case is primarily driven by what feels tangible to us--the fast growth of the merchant acquiring business and the midmarket strategy as well as the push toward in-store solutions--we now believe that optionalities, mainly in the form of issuing solutions, have gained some materiality. Nevertheless, given the remaining high uncertainty discount we think is adequate for these potential new revenue streams, we expect a material valuation gap to remain between what we and the market believe is a fair price for Adyen even after our model update.