Fidelity National Information Services (FIS) Stock Plunges: What Happened?

Fidelity National Information Services (FIS) stock experienced a significant drop last week, with shares plunging 12% as of afternoon trading on Tuesday, February 17, 2025. This decline marked the company's worst day on the market since 2023. The stock price drop can be attributed to several factors that align with the company's recent financial performance and guidance.



1. Disappointing Guidance: FIS reported quarterly earnings that fell short of Wall Street estimates and issued a disappointing forecast for the future. The company's revenue guidance for the current quarter and full year was below analysts' expectations, which negatively impacted investor sentiment. The company's guidance for the first quarter of 2025 was between $2.49 billion and $2.51 billion, and sales for the full year were expected to be $10.44 billion to $10.5 billion. Analysts had expected revenue for the first quarter of $2.56 billion and for the year of $10.6 billion.
2. Earnings Miss: FIS reported earnings per share of $1.40 adjusted vs. $1.36 expected and revenue of $2.6 billion vs. $2.63 billion expected. Although the company beat on both sales and earnings estimates, the miss on revenue and the guidance for lower growth in the future led to a decline in investor sentiment.
3. Non-cash Goodwill Impairment Charge: FIS took a non-cash goodwill impairment charge of $17.6 billion on its ill-fated 2019 acquisition of Worldpay. This charge wiped out all the year's earlier profit and pushed the company into a $27.68-per-share loss for the year. This impairment charge increased market ambiguity, as investors were uncertain about the company's future prospects and the potential impact on earnings.
4. Spinoff Announcement: FIS announced that it would exit its "Merchant Solutions" business to avoid taking further losses. The spinoff is expected to take another 12 months, during which the company warned investors to expect a continued drag on results. This announcement increased market ambiguity, as investors were uncertain about the potential impact of the spinoff on the company's future performance.



These factors interacted with each other to influence investor decisions. The disappointing guidance and earnings miss led to a decline in investor sentiment, as investors became more pessimistic about the company's future prospects. The non-cash goodwill impairment charge and the spinoff announcement increased market ambiguity, making it more difficult for investors to make informed decisions. The combination of these factors led to a decline in investor confidence and a subsequent decrease in the stock price.

In conclusion, the significant drop in FIS's stock price last week can be attributed to the company's disappointing guidance, earnings miss, non-cash goodwill impairment charge, and spinoff announcement. These factors interacted with each other to influence investor decisions, leading to a decline in investor confidence and a subsequent decrease in the stock price. Investors should closely monitor the company's future performance and guidance to make informed decisions about their investments.