Here's How Adyen Beats the Market From Here

Adyen (OTC: ADYEY) is down 66% from all-time highs set five years ago, when the pandemic was raging, but its business is significantly larger today. Revenue and net income have more than doubled for the payment processing company since then, while its share price has been more than cut in half. This type of scenario can be a great opportunity to buy on the dip.

Investors are nervous due to management's reduced outlook for fiscal year 2026 and a general valuation reset. Now, the stock appears undervalued for investors who have a time horizon longer than a year.

Here's why Adyen stock can outperform the market from here.

A growing market share in global payments

By building strong systems for businesses to process payments worldwide that are superior to legacy options, Adyen has consistently gained market share during the past decade-plus. It continued to do that in the second half of 2025, with processed volume up 12% year over year, or 19% excluding the effects of an unprofitable customer.

With a set fee based on payment volumes, Adyen makes money the more payments it processes for customers like Uber and Spotify. Net revenue rose 21% from a year earlier in constant-currency terms last quarter, outpacing growth in payment volume due to the aforementioned unprofitable customer ending its contract.

As a frugal operator, Adyen has best-in-class margins, posting a pretax income margin of 54% in the second half of last year. Combined with strong revenue growth, this shows how Adyen's superior platform is helping win customers without major discounts or a marketing sales push. It lets its product speak for itself.

Image source: Getty Images.

A low price and strong guidance

Adyen keeps adding products to its lineup, including a nifty new tool called Dynamic Identification that uses its proprietary data to help customers better filter fraudulent buyers from legitimate ones. Merchants in a test saw a 6% rise in customer conversions when using Dynamic Identification, which is a hugely valuable improvement.

It is this tool and much more that drive customers to send more volume Adyen's way to process payments around the globe. Management anticipates revenue growth in 2026 of 20% to 22%, which is slightly below analyst expectations but still outpacing the overall payments market. Its margin as measured by earnings before interest, taxes, depreciation, and amortization is expected to tick above 55% by 2028.

Today, the company's price-to-earnings (P/E) ratio is about 31, which is close to the S&P 500 index average. Through strong revenue growth and margin expansion, Adyen should be able to increase its earnings at a rapid rate for many years to come. Combined with a conservative balance sheet, the stock looks primed to outperform the market during the next five years.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adyen, Spotify Technology, and Uber Technologies. The Motley Fool has a disclosure policy.