Adyen (ADYE.Y 0.53%) isn't a household name to most American investors, but it should be. The Netherlands-based fintech is becoming a payment processing leader, especially among larger companies. In this Fool Live video clip, recorded on Jan. 27, Fool.com contributors Matt Frankel and Lou Whiteman discuss why Adyen is a stock that investors should put on their radar.
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Matt Frankel: Guys, what do you think of Adyen currently? Business-wise, I feel they're one of the best-in-class in operations, financials, and tailwinds. But even after a decent drop, it's a crime to call it reasonably valued. Any thoughts?
Well, I don't necessarily agree with that it's a crime to call it reasonably valued, and I'll tell you why. If you're not familiar, Adyen is a payment processor. They're based in the Netherlands, which is why a lot of Americans haven't heard of them. They're truly a global payment processor, so their volume is right between Square (SQ -1.57%) and PayPal (PYPL 0.64%), so they are big. They focus on big merchants. They don't have a consumer-facing business really, which is why a lot of Americans haven't heard of them either. Their customers include companies like Microsoft (MSFT 0.37%), Etsy (ETSY -2.17%), Uber (UBER -2.03%), the big ones, eBay (EBAY -0.14%). If you remember a few years ago, eBay dropped PayPal as its main payment processor and that made a lot of news that was in favor of Adyen.
No other payment processor has gotten the attraction with large enterprises the way Adyen has. They do it profitably and they do it all over the world. The U.S. is about a quarter of their revenue and climbing. I like Adyen, I think, if you want some foreign exposure. Of course there's other dynamics at play like foreign exchange risk, because most of the revenue is not in U.S. dollars. But if you want a payment processing company that's not Square or PayPal, that's one to definitely look at.
Lou Whiteman: Much more embedded, too, with these big businesses, as you mentioned. I mean, Square has artisanal roots and PayPal, mostly small businesses. Adyen has a lot of really huge customers -- the one-stop shop, whether or not it's point-of-sale or online. I do say, I'll tell you without going -- because this goes well beyond fintech, so I will keep this brief, but valuation is a weird topic right now. I hear it a lot on Motley Fool Live sometimes in terms of, I hated this idea of, well, such and such company was at this value. The business hasn't changed, so we'll get back to it. I hate that analysis, because that doesn't even consider the fact that it might have been a mistake three months ago.
But where I do think it works is if this is when you have to start looking at total addressable market and see what's out there. Adyen, I think, is pretty early in a huge land grab with multiple winners, but they are coming into the United States. I think Dick's Sporting Goods (DKS -0.30%), you're going to see them coming into new markets. The other big catalyst out there is, honestly, as, Matt, as you say, people don't know about if they just decide to get a New York listing, I think that would be a huge catalyst toward getting higher. I really like this company. I don't own it, but this is one I keep looking at, saying, why don't I own this?
