Whether a train ticket, new shoes or a pizza for a night in, for more and more people ordering goods and services on the internet is part and parcel of day-to-day life. According to Statista, almost 3.5 billion consumers around the world utilise the many different opportunities afforded by e-commerce. By 2024 this "community" is set to grow by more than 1 billion to 4.63 billion members. This prediction will come as music to the ears not just of the operators of virtual marketplaces: the e-commerce ecosystem includes many service providers as well. While consumers tend to take less notice of these companies, they are among the absolute high-flyers on the stock market. This is especially true for the providers of payment systems, although the segment is still reeling from the dramatic accounting scandal and price collapse of Germany's Wirecard. Share prices of its competitors continue their upward trajectory, possibly in part because they can now hope for additional business.
Leonteq is taking advantage of this momentum to launch a total of three Barrier Reverse Convertibles on equities from this sector. In each case the underlying stocks are two European and two US companies. On the old continent, Worldline could expand its dominant position following the collapse of Wirecard, the French company having long taken a global approach. In February Worldline took over a competitor, Ingenico, also based in France. Worth EURbn 7.8, the deal makes the company the fourth largest payment processor in the world. Even so, Worldline was caught in the slipstream of the corona sell-off shortly afterwards. Since then, though, the share, backed by solid quarterly figures, has been able to make up practically all the lost ground. The performance gave the French no chance of competing with Adyen. In the last few months the share price of the Dutch payment specialist has absolutely soared (see chart). It seems that the crisis is having precious little effect on the growth of the service provider, which was listed in 2018. Sales of Adyen climbed more than a third in the first quarter to stand at EURm 135.5. The group, which works for the driver service Uber and social media giant Facebook, among others, earned EURm 63.6 from its operating activities, up 16% on the same period last year.
Shopify, too, enjoyed a full part in the latest tech rally. The Canadian company offers an all-round service: both online traders and bricks-and-mortar businesses can use the Shopify platform. The spectrum ranges from virtual shops through links with mobile apps to data analysis and payment processing. More than one million businesses from over 175 countries make use of the service. In the first quarter of 2020, the gross merchandise volume (GMV) of Shopify rose by 46% to USDbn 17.4. This volume of transactions exceeded the company's expectations. By contrast, Square reported a surprising loss for the first three months of the year. Towards the end of the quarter especially, the US service provider, which is also positioned across the whole e-commerce ecosystem, suffered a collapse in business. The mediocre interim report was unable to stop the Square share price flying high (see chart), though, because investors anticipate that the coronavirus pandemic will give wings to online shopping and hence the business of the full-service provider. And in fact the growth in payment volumes at the company, which was co-founded and is led by Twitter CEO Jack Dorsey, has indeed picked up pace again.
The combination of the two North American companies enables Leonteq to pay a guaranteed coupon of 17% p.a. As long as neither Shopify nor Square falls to or below the barrier of 50% of the initial fixing during the 15 month term, investors will receive the entirety of their nominal capital back. The Barrier Reverse Convertible comprising the European duo of Adyen and Worldline offers the opportunity of a 10% p.a. return combined with a risk buffer of 45%. The term of this issue is also 15 months. A return optimisation product based on all four of these equities offers a barrier at 50% of the starting prices of Adyen, Shopify, Square and Worldline with a guaranteed coupon of 20% p.a. Each of the three new issues is denominated in CHF and also comes with a soft callable function giving the issuer the right to terminate the relevant product on the dates set out in the termsheet and redeem it early.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.
