Why Bill Stock Is Sinking This Week

Bill Holdings (BILL -2.34%) stock is losing ground this week. Ahead of the market opening this Friday, the company’s share price was down 10.7% compared to last week’s market close, according to data from S&P Global Market Intelligence.

Many fintech companies struggled this week after French payments specialist Worldline (WRDL.Y 10.69%) published underwhelming quarterly results and issued cautious guidance. While there wasn’t any business-specific news driving Bill stock lower, the fintech software specialist was caught up in the valuation pullback. 

Worldline is making investors more cautious about Bill stock

While Worldline’s revenue grew 4.8% on a constant currency basis to reach 1.18 billion euros in the third quarter, the sales performance fell short of expectations. Following the weaker-than-anticipated results, the company lowered its annual revenue growth forecast to between 6% and 7%. Previously, the payments specialist had guided for annual revenue growth to come in between 8% and 10%.

In addition to implementing tighter standards for its merchant partners, Worldline also cited weakening macroeconomic conditions as reasons for its sales miss and downward guidance revision. In response to the soft results and gloomy forecast, investors became more cautious about the broader fintech space — and Bill and other big names lost ground. 

What comes next for Bill stock?

Worldline primarily operates in European markets and cited deteriorating economic conditions in Germany as a key reason for its weak Q3 results and forward guidance. Meanwhile, Bill’s operations are heavily concentrated in the U.S. Accordingly, it’s not clear that the same headwinds that are impacting Worldline will necessarily create issues for Bill. 

On the other hand, investors and analysts have become increasingly cautious about the global macroeconomic picture lately. 

BILL PE Ratio (Forward) data by YCharts

Valued at roughly 46 times this year’s expected earnings and 7.4 times expected sales, Bill has a highly growth-dependent valuation even after a 17% drop for its stock this year. The company has been serving up impressive performance lately, with total revenue growing 48% year over year to reach $296 million in its fiscal fourth quarter, but macroeconomic pressures could cause investors to assign more cautious growth multiples and send its share price lower.