US FinTech stocks declined Wednesday following a report overnight from European payment firm Worldline. Worldline issued guidance and warned of "macroeconomic deterioration" in places like Germany.
Shares of Worldline plunged following the disappointing guidance, falling 58%, and the negative sentiment impacted US companies like Block (NYSE:SQ), PayPal (NASDAQ:PYPL), and Affirm Holdings (NASDAQ:AFRM).
In the view of analysts at Mizuho Securities, the sympathy selloff in US stocks was “overdone.” They also think the warning contradicted comments from management at Visa (NYSE:V).
“Worldline's warning of a 'macroeconomic deterioration' in core geographies like Germany is hurting the entire FinTech sector pre-market. Key stocks like AFRM, SQ and PYPL are each trading down,” wrote the analysts.
The analysts added, “We view the worries as overblown for the following reasons: (1) Visa specifically did not call out a recession in its initial FY24 guide, which it provided yesterday. Plus, when asked about Europe, Visa's CEO mentioned ‘resiliency’ and feeling ‘good about what's happening’ in the EU ex. UK. (2) Stocks like AFRM and SQ have little to no exposure to Germany & Europe, which means the negative stock reactions are unmerited.”
Shares of Block traded lower by nearly 8% shortly after the warning from Worldline, PayPal was lower by about 5%, and Affirm was lower by 12%.
Overnight Affirm’s stock was downgraded from Neutral to Sell by analysts at Compass Point, and this may have also weighed on its shares Wednesday morning.