Fiserv Stock Crashes 44%—Here's Why

Core Viewpoint - Fiserv's stock plummeted over 40% following a reduction in its earnings outlook and a significant slowdown in its payment business, raising investor concerns amid an ongoing lawsuit regarding alleged inflated growth claims related to its Clover platform [1][3]. Financial Performance - Fiserv's stock fell by 43.9% in a single day, primarily due to a morning selloff after the company revised its full-year outlook downward [3]. - The company reported only 1% organic revenue growth in Q3, a sharp decline from 8% in Q2, and significantly lower than the double-digit growth seen earlier in the year [3]. - Growth in the Merchant Solutions segment, which includes the Clover payments system, decreased to 5%, approximately half of the previous quarter's growth rate [3][4]. - Fiserv now anticipates organic revenue growth of 3.5% to 4% for the full year, down from 10% in the second quarter [4]. Market Impact - The selloff resulted in a market capitalization loss of $30 billion, with the company's value dropping from $68.6 billion to $38.4 billion [5]. Management Commentary - CEO Mike Lyons acknowledged that the company's current performance does not meet expectations from stakeholders [6]. Legal Issues - Fiserv is facing a federal securities class-action lawsuit alleging that it inflated growth figures for its Clover platform by migrating merchants from its older Payeezy system, which misrepresented revenue growth [7]. - The lawsuit claims that former CEO Frank Bisignano misled investors about the sources of Clover's revenue growth, stating that 90% would come from new merchants while the company transitioned around 200,000 Payeezy merchants to Clover [7]. - By early 2025, Clover's gross payment volume growth slowed to 8%, down from 14%-17% the previous year, indicating a significant decline in performance [7]. Leadership Changes - Fiserv announced a leadership and board overhaul, appointing Takis Georgakopulous and Dhivya Suryadevera as co-presidents and Paul Todd as chief financial officer [9].