Fiserv's shares plummeted 44 per cent on Wednesday, wiping out over £24 billion ($30 Billion) in market value after the fintech giant cut its growth outlook and revealed a sharp slowdown in its payment business.
The collapse, one of the steepest in the company's history, followed disappointing quarterly earnings and deepening investor concerns about leadership changes and legal troubles surrounding its Clover platform.
Fiserv's Outlook Slashed and Stock Value Erodes
The Milwaukee-based financial services company reported quarterly adjusted earnings per share of £1.67, far below analysts' expectations of £2.16. Revenue for the quarter came in at £4.02 billion, missing estimates of £4.39 billion. The company also reduced its annual revenue growth forecast to between 3.5 per cent and 4 per cent, down from a previous 10 per cent, citing macroeconomic pressures and weak consumer spending.
Chief Executive Mike Lyons said the firm must 'change the way we forecast and communicate about our business'. He added that Fiserv's current performance was not aligned with stakeholder expectations, prompting a 'rigorous review' of its operations.
Analysts from Truist described the results as 'shockingly bad', while William Blair called them 'impossible to sugarcoat'. The financial downturn has rattled investor confidence, driving Fiserv's market capitalisation down from £56.7 billion to £31.8 billion in just one day, according to the Wall Street Journal.
Legal and Leadership Turmoil
Adding to investor anxiety, Fiserv faces a federal securities class-action lawsuit in New York alleging it inflated growth figures for its Clover payment platform. The complaint claims the company forced merchants using its older Payeezy system to migrate to Clover, then presented the switch as organic growth.
Former CEO Frank Bisignano, who left earlier this year to lead the US Social Security Administration, previously told investors that 90 per cent of Clover's growth came from new clients. However, internal data revealed that much of the expansion stemmed from migrated Payeezy merchants, creating a misleading picture of revenue performance.
Amid these challenges, Fiserv announced a major management reshuffle. Paul Todd, former chief financial officer at Global Payments, replaces Robert Hau as CFO, while Takis Georgakopoulos and Dhivya Suryadevara have been appointed co-presidents. Lyons said the changes mark a turning point for the company's leadership as it attempts to rebuild credibility.
Mounting Industry Pressure and Market Fallout
Fiserv's stock crash also sent shockwaves through the fintech sector. Shares of FIS fell nearly 9 per cent, Global Payments dropped 6.7 per cent, and Block and Jack Henry lost around 3 per cent and 4 per cent, respectively. Analysts at BTIG said the broader fintech decline reflected weak investor sentiment, though Fiserv's issues appeared 'company-specific'.
J.P. Morgan analysts warned of deepening headwinds in Fiserv's financial and merchant divisions, while other firms downgraded the stock, citing a potential multi-quarter turnaround. 'Investor confidence will be shaken to the extent that Fiserv becomes a multi-quarter recovery story with diminished visibility,' William Blair noted.
Despite the grim outlook, Lyons said the company remains committed to long-term growth, focusing on structural improvements over short-term gains. However, with slowing payment volumes, management upheaval, and a credibility gap, analysts believe the company faces a steep climb to regain investor trust.
