The crash in listed payment service provider shares brings back memories of the Wirecard crash. What does this mean for fintech valuations?

The crash in listed payment service provider shares brings back memories of the Wirecard crash. What does this mean for fintech valuations?

Yesterday, the listed shares of payment service providers crashed on a broad basis and in some cases brought back memories of the Wirecard crash shortly before the DAX company went bankrupt. Worldline disappointed with its sales figures in the third quarter and lowered its organic growth forecast for the current full year. Worldline justified the deviation from the market consensus by the deterioration in consumer behavior, especially in Germany. Customers buy less and therefore pay less. This eats into the revenues of payment service providers.

According to a report from Paymentandbanking.com, this crash has consequences for fintech valuations. The correction of tech multiples on the capital markets has a direct impact on the valuations of startups. In Germany, this primarily affects companies such as Unzer, Ratepay, Computop and also Europe-wide companies such as Klarna. Worldline's low market valuation has an impact on the valuations of smaller payment service providers and fintech startups.

In the case of Unzer, it became known that the PE company KKR sold most of its stake in Unzer to the company's investors. Unzer did not achieve the agreed business goals and had to restructure to avoid bankruptcy. Unzer's valuation has fallen sharply and it remains to be seen whether higher valuations can be achieved again in a few years.

Ratepay, formerly owned by private equity (Bain/Advent), was also taken over by the Italian Nexi Group together with the Scandinavian payment service provider Nets. Ratepay is currently being traded as a takeover candidate again. However, the valuations of PSPs on the stock markets have corrected significantly, which could have an impact on Ratepay's selling price.

According to the report, Computop, in which Nexi made a partial entry, missed the ideal time for an exit with a high valuation. Now the time for a lucrative sale seems even further away.

Worldline's poor outlook and strong investor reaction show that the fintech hype has run out of steam. The over-optimistic prices of payment providers in the context of the Corona boom will probably not be achieved again in the long term. Startups in this area need to focus more on profitable growth and take smaller steps when it comes to exits.

The impact of this crash on the market and the financial industry is significant. The valuations of startups and payment service providers have fallen, which could impact their financial capabilities, growth opportunities and potential acquisitions. Investors have become more cautious and are likely to scrutinize their investment decisions more closely. It is important to consider current market conditions and make realistic valuations to minimize potential financial risks.

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According to a report by Paymentandbanking.com, (Source: paymentandbanking.com )