Fiserv Stock Sinks 40%. Why the Fintech Is Having Its Worst Day Ever.

Fiserv posted a mixed third quarter and slashed its full-year earnings guidance range. (Courtesy Fiserv)

Fiserv stock was headed for its largest same-day percentage decrease on record after the financial services company slashed its full-year outlook and delivered what some analysts are calling “abysmal” results for the third quarter.

The company said it now sees adjusted earnings between $8.50 and $8.60 a share in 2025. This compares to a forecast from July, when the company said it expected earnings in the range of $10.15 to $10.30. The new outlook was sharply below Wall Street’s projections: analysts tracked by FactSet were looking for adjusted earnings of $10.15.

CEO Mike Lyons, who assumed the role in May, attributed the guidance cut to overly optimistic expectations for growth in Argentina and a previous focus on “short-term initiatives” that hurt Fiserv’s ability to form long-term relationships with customers.

“We have made the decision to deprioritize the short-term revenue and expense initiatives which, of course, has some near-term impact on our growth and profitability,” Lyons said on the earnings call.

Shares sank 40% to $75.90 on Wednesday, putting the stock on pace for its lowest close since Jan. 3, 2019, when it ended the session at $70.11, according to Dow Jones Market Data.

For the third quarter, Fiserv posted adjusted earnings of $2.04 a share, missing the $2.64 analysts had forecast. While revenue grew slightly to $5.26 billion in the quarter, this number came in below the $5.35 billion consensus among analysts polled by FactSet.

Organic growth also ticked up 1%, but this marked a slowdown from the 8% growth seen a quarter earlier. Fiserv’s individual lines of business didn’t perform any better: revenue in the company’s Merchant Solutions segment grew 5%, down from 9% last quarter, while its Financial Solutions segment flipped to negative growth. Revenue fell 3% year over year, compared to a 7% increase in the second quarter.

The company also announced a handful of leadership shake-ups including naming a new finance chief and co-presidents. It all made for a confusing third-quarter print.

Jefferies analyst Trevor Williams remarked that the magnitude of the earnings miss and guidance cut was “difficult to comprehend” in a research note Wednesday. “We would not be surprised to see the stock down 40%+ today,” he added.

Separately, BTIG analysts commented that Fiserv’s latest quarterly results “were not even ballpark close to Street,” with implied guidance for the current fourth quarter also falling well below estimates.

“Investor sentiment was already very weak on FI before this morning’s news,” the BTIG team wrote. The stock has struggled over the past year: Before Fiserv posted earnings, shares had already fallen more than 35% this year and 37% over the past 12 months.

The “abysmal” third-quarter results, along with the guidance cut, “will only maker investor appetite more challenged,” BTIG wrote.

Fiserv’s name is most commonly associated with former CEO Frank Bisignano, who left to oversee the Social Security Administration earlier this year. Bisignano was also named CEO of the Internal Revenue Service in October.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com