Nuvei (TSX:NVEI) is continuing to trade on a negative note in 2023. NVEI stock has lost 37% of its value this year to currently trade at $21.69 per share, extending its one-year losses to over 46%. By comparison, the TSX Composite Index has witnessed a minor 1% gain so far in 2023.
Do its recent losses make NVEI stock worth buying for the long term? Before we discuss that, let’s take a closer look at some main fundamental factors responsible for its poor performance of late.
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Factors affecting NVEI stock’s performance
Nuvei stock’s big declines in the post-pandemic era could be attributed to multiple factors. First, we have seen a slowdown in consumer spending in the last two years after rising inflationary pressures forced central banks to rapidly increase interest rates. This led to a stock market selloff, also pressuring NVEI stock.
Second, Nuvei stock witnessed another round of selloffs in April this year after a New York-based short-seller, Spruce Point Capital, severely criticized the company’s business practices in a report. The short seller also raised questions about Nuvei’s recent Paya Holdings acquisition. While the short report didn’t make major changes in Street analysts’ opinion about NVEI stock, it seemingly badly affected retail investors’ sentiments, triggering a selloff in its share prices.
Third, the ongoing macroeconomic concerns have dimmed Nuvei’s financial growth prospects in recent quarters. In its second-quarter earnings report, the Montréal-based payment technology solutions provider cut its growth expectations for the second of 2023, citing “longer than anticipated lag times in new business” and its “recent decision to exit its relationship with a large customer.”
Besides these factors, another major reason for a big selloff in NVEI stock could be the company’s exposure to the cryptocurrency market, which has seen extreme volatility in the last year.
Where will Nuvei stock be in five years?
In the first of 2023, Nuvei’s adjusted earnings fell 17% year over year to US$0.78 per share, with increasing financial costs due to amounts drawn under its new reducing revolving credit facility. Nonetheless, its total revenue rose nearly 50% from a year ago to US$611.9 million, reflecting stable demand for its payment solutions, despite a tough macroeconomic environment.
It’s true that Nuvei’s exposure to the cryptocurrency market and macroeconomic concerns have affected its financial growth to some extent of late. However, the company’s consistently expanding global presence, focus on growth initiatives, and ability to continue posting strong sales growth, even in difficult market environments brightens its long-term growth outlook. These could be some of the key reasons why Street analysts expect Nuvei to continue delivering double-digit top- and bottom-line growth in 2024 and 2025. Considering its strong long-term fundamental outlook, the recent big declines in Nuvei stock make it look undervalued to buy for years to come.
While it’s nearly impossible for anyone to predict where exactly NVEI stock will be five years from now, I wouldn’t be surprised if the stock doubles or even triples in value in the coming years as soon as we start seeing improvements in the macroeconomic environment.
Note that Nuvei will announce its third-quarter results on November 8, which could make its stock highly volatile.
