Shares of financial-technology companies took a hit on Wednesday after European payments provider, Worldline SA, issued a bleak profit warning. However, one analyst believes that Wall Street might be overreacting.
Several major players in the industry saw their shares decline. Affirm Holdings Inc. (AFRM) dropped over 12%, Block Inc. (SQ) fell more than 6%, and PayPal Holdings Inc. (PYPL) experienced a nearly 5% decrease. Worldline’s shares itself plummeted by over half.
Mizuho analyst Dan Dolev weighed in on the situation, stating that American payment-technology companies were being reprimanded excessively for a warning that did not directly impact their businesses. Dolev mentioned that stocks like Affirm and Block have minimal exposure to Germany and Europe, making the negative market reaction unwarranted.
Furthermore, Worldline’s remarks seemed contradictory to the optimistic outlook provided by Visa Inc. In their recent report, Visa did not account for a recession in their fiscal 2024 forecast, surpassing concerns held by some investors. Dolev also pointed out that Visa’s CEO spoke positively about the European Union, excluding the UK.
Overall, it appears that the market response to Worldline’s warning may be excessive, with many financial-tech companies having limited exposure to the underlying issues mentioned.