Worldline Shock Sends European Payments Sector into Slump

26 Oct, 2023

Worldline Shock Sends European Payments Sector into Slump

Worldline's Stock Plummet and its Ripple Effect on European Payments Industry

Worldline, the French payment company, sent shockwaves through the market when it unexpectedly cut its full-year targets, causing its stock to plummet by more than half. This unexpected move not only spooked investors but also had a ripple effect on its industry peers, including Nexi and CAB Payments.

Worldline attributed the cut in its forecasts to an economic slowdown that has impacted its business, particularly in Germany. Additionally, the company took measures to reduce risks related to the rising threat of cybercrime by severing ties with some of its merchants.

The payments sector, which experienced a surge during the COVID-19 pandemic as consumers increasingly shifted to online transactions and digital payments, is now facing greater scrutiny from investors. Stretched valuations, combined with the impact of higher interest rates and a significant drop in global funding for fintech deals, have contributed to this caution.

The repercussions of Worldline's announcement were stark, with its shares (WLN.PA) initially unable to open on the Paris stock exchange due to excessive volatility. Eventually, when trading resumed, the stock plummeted by as much as 60% to reach a historic low of 9.31 euros. This dramatic sell-off resulted in a substantial reduction in the company's market capitalization, amounting to approximately $4 billion, according to calculations based on LSEG data by Reuters.

Mediobanca Securities analysts noted the unexpected nature of Worldline's guidance cut and the concerns surrounding German merchants, remarking that these developments had completely transformed Worldline's equity story.

The shockwaves from Worldline's announcement were felt across the industry, with Italy's Nexi (NEXII.MI) experiencing a sharp decline of 20.4%, marking its largest single-day drop since March 2020.