Market Movers - 14 September 2024
Market Movers - 14 September 2024
Stocks covered: ADYEN, SE, ABNB, EVO, NU, V
Welcome back to the Wolf of Harcourt Street Newsletter.
Market Movers is your time-saving guide to crucial stock news, cutting through the noise.
With all that being said, let’s dive into today’s edition!
Todays Agenda
Adyen Can Save Businesses Billions
Sea Limited Shopee Forces Competition Out of Vietnam
Airbnb Launches Co-Hosting Service
Evolution Acquires Arcadia Games Solutions
Nubank Stops Nucoin Crypto Trading
Visa The Next Tenfold Growth Market
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1. Adyen (ADYEN) Can Save Businesses Billions
Adyen published a report titled Strategies to Reduce Your Total Cost of Payments which highlights the potential for enterprise businesses to cut costs and boost revenue through smart payment strategies. Key insights include:
Beyond Transaction Fees: Focusing solely on transaction fees can lead to hidden costs. A holistic approach to payment providers can generate significant long-term savings.
Interchange and Scheme Fees: Interchange and scheme fees represent 85% of payment costs, but local transactions are up to 59% cheaper than cross-border ones. Optimizing payment routing can reduce costs without impacting authorization rates.
Revenue Gains through Innovation: By updating primary account numbers (PANs) and using network tokens, businesses improved authorization rates by 6%, resulting in $7.55 billion in incremental revenue.
Offline Transactions: Adyen's Store and Forward solution helped top businesses avoid $42.1 million in losses by preventing offline declined transactions.
Faster Checkout: Queue-busting solutions, like mobile POS systems, are critical for improving in-person payment efficiency, where 80% of retail transactions occur.
FTE Cost Reduction: Streamlining operations via a centralised payment system can reduce full-time equivalent (FTE) costs by up to 75%, simplifying market expansion and reducing developer workload.
Source: Adyen
My Perspective: This further supports the belief that Adyen's value proposition for customers is exceptionally strong, offering significant benefits by lowering the total cost of ownership for payment processing.
2. Sea Limited (SE) Shopee Forces Competition Out of Vietnam
GoTo Group, an Indonesian ride-hailing and delivery service, announced it will cease operations in Vietnam by September 16 due to intense competition. Gojek, its core unit, first entered Vietnam in 2018 in partnership with Go-Viet, marking GoTo's first international venture. Despite efforts to replicate its Indonesian success, Gojek struggled to compete with dominant players like Grab and ShopeeFood, achieving only a 3% market share in food delivery, compared to Grab's 47% and ShopeeFood's 45%.
Source: Nikkei Asia
My Perspective: Survival of the fittest is in play, and there's more proof that Shopee is one of the winners. In Vietnam's rapidly growing e-commerce market, Shopee commands a dominant 61% market share.
3. Airbnb (ABNB) Launches Co-Hosting Service
Airbnb plans to introduce a co-hosting service in October that will connect property owners with people willing to manage listings. This service is expected to bring additional supply to the platform. Initially, Airbnb does not plan to monetise the co-hosting service, but may consider it in the future.
Source: MT Newswires
My Perspective: The announcement was made some time ago but seems to be gaining traction now that the launch is less than a month away. I see a couple of key benefits:
Supply: By connecting property owners with co-hosts, Airbnb can increase the number of available listings. Owners who were hesitant to list due to management concerns can now participate, unlocking previously untapped inventory.
Monetization: In the future, Airbnb could take a cut of co-hosting fees or charge for premium matching services. It might also offer additional tools or resources to co-hosts for a fee, creating a new revenue stream.
4. Evolution (EVO) Acquires Arcadia Games Solutions
Evolution has announced an agreement to acquire Arcadia Gaming Solutions, known for its innovative technology that allows players to engage with physical arcade machines virtually via desktop or mobile devices.
The acquisition involves an initial payment of €2.5 million, with an additional performance-based earn-out set for 2027. The transaction is expected to close in the second half of 2024, pending certain conditions.
Source: Evolution
My Perspective: While I don't know too much about Arcadia Game Solutions, small bolt-on acquisitions like this make sense for Evolution. The acquired company could either be integrated into Evolution’s One-Stop-Shop solution or used to create unique gameplay features that differentiate Evolution's products from competitors.
5. Nubank (NU) Stops Nucoin Crypto Trading
Nubank announced the termination of crypto trading for its token, Nucoin, to protect users from market volatility. Launched in late 2022 on the Polygon blockchain as part of a customer reward program, Nucoin is now restricted to unlocking benefits within the Nubank ecosystem, such as discounts and exclusive experiences.
Source: Nubank
My Perspective: While Nucoin was never a core part of my investment thesis, I find this move somewhat confusing. Investing in anything, whether stocks or crypto, is inherently volatile, so the explanation doesn’t quite add up for me. Is there something else at play? Definitely one to keep a close eye on.
6. Visa (V) The Next Tenfold Growth Market
Visa is aiming to significantly expand digital payment adoption and financial inclusion in Pakistan. The company plans to increase the number of businesses accepting digital payments tenfold in three years. To achieve this, Visa has partnered with 1Link, a key payment provider in Pakistan, to enhance transaction efficiency and broaden merchant acceptance, especially among smaller businesses.
This collaboration is expected to streamline remittances, which are crucial to Pakistan's economy, making them more secure and efficient. With a large unbanked population and increasing digitization efforts, Visa sees a significant growth opportunity. The recent $7 billion IMF bailout, which includes reforms to boost government revenue and formalize the economy, emphasizes the role of digital payments in promoting transparency. Additionally, the partnership will enable PayPak cards, a local competitor, to be used on Visa’s Cybersource platform for online transactions.
Source: Yahoo Finance
My Perspective: Despite being a $550 billion business, Visa still has an attractive growth potential. Much of this growth will come from emerging markets, which still have large unbanked populations. Take Pakistan, for example. Of the 137 million adults in the country, only 60% have a bank account.
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Wolf of Harcourt Street
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