A first look at Fiserv
Shares of third-party payment processor Fiserv (FISV) crashed 10.9% yesterday, hitting a 10-year low of $47.91.
The drop came after the company announced CEO Mike Lyons was leaving to helm Truist Financial (TFC) – which, interestingly, was also down 6.2% yesterday.
After a multidecade run as one of the all-time-great growth stocks, Fiserv has completely imploded...
It has fallen a staggering 80% since peaking at $237.79 just 15 months ago:
This has drawn the attention of my old friend Mike Burry of The Big Short fame, who wrote on his Substack yesterday (only paid subscribers can see the full post):
The CEO left unexpectedly, which is a thesis violation if there ever was one. Thesis violation does not mean sell. It means re-evaluate.
Ex-CEO Mike Lyons joined Fiserv 13 months ago, and the stock has fallen 71% during his tenure. It is a bad look, but the prior CEO before Lyons had set the company up with aggressive accounting and short-term sales tricks that had to be unwound...
So, Lyons gets a clean start now as CEO of Truist Bank – which is no slouch and a top ten banking institution... It is always possible Lyons found Fiserv impossible to turn after he got a deep look at it. That is not, however, a foregone conclusion. Lyons is a long-time investment banker, so Truist may be a more natural fit.
Burry is optimistic about Fiserv's new CEO, who seems to have the payment-technology expertise that Lyons lacked:
CEO Takis Georgakopoulos comes from the fast-growing Clover side of the business. Clover competes globally in payments by being preferentially bolted onto and into Fiserv's extensive roster of current clients.
Takis spent 17 years at JP Morgan, last running JPM's global payments business before joining Fiserv in late 2024. Takis is an inside hire but not part of the old guard.
And Burry likes the business as well, no matter who's CEO:
Fiserv holds the #1 spot in the 2025 IDC FinTech 100 for the third straight year. It processes 10,000 transaction per second, with 1.8 billion issuer accounts, 339 million deposit and loan accounts, and reaches 95% of U.S. households.
I'll keep going. 3.9 million small businesses, 900,000 Clover merchants, 7,000 enterprise-level clients across almost 1 million locations.
He concludes that FISV looks cheap today, which sounds pretty interesting. So let's take a first look at the company's historical financials...
Fiserv grew its top and bottom lines at a modest rate for more than a decade. Then it made its huge $22 billion all-stock acquisition of financial-services company First Data in 2019, which turbocharged growth for the next six years:
Free cash flow ("FCF") followed suit, rising nearly fivefold from 2018 through 2024.
But in 2025, FCF declined by 15% despite the company reporting 11% higher net income – evidence of the "aggressive accounting and short-term sales tricks that had to be unwound" Burry talked about.
That said, Fiserv remains a cash-generating machine:
Fiserv's debt rose sharply in 2019 when it acquired First Data's $17 billion debt load:
Since then, Fiserv's net debt has continued to rise. That's because it spent more than 100% of its FCF from 2023 to 2025 buying back stock:
Diluted shares outstanding spiked in 2019 and 2020 due to the First Data acquisition. But they've declined by 21% since then thanks to the aggressive share repurchases:
Unfortunately, Fiserv committed the all-too-common blunder of spending big when the share price was at its peak in early 2025 – which was wildly overvalued – but then cutting back after it collapsed.
We can see that misstep by looking at how much the company spent buying back stock per quarter:
In total, Fiserv spent $24.4 billion on share repurchases in the past seven years – nearly its entire $26 billion market cap (plus, it accrued $28.5 billion in net debt).
Imagine how much better off the company would be right now if it had halted repurchases as the stock soared and instead paid down debt.
Lastly, let's go over its valuation...
At yesterday's closing price of $47.91, the stock is trading at a mere 5.9 times this year's consensus analysts' estimates of $8.12 per share.
That's an all-time low – far below the 19.2 times average forward price-to-earnings (P/E) multiple it has traded for over the past quarter century:
A 5.9 times P/E multiple is usually only reserved for a company that's deeply cyclical, has a dangerously high level of debt, and/or whose earnings are about to collapse.
I don't think any of these apply to Fiserv. So I'm going to put it alongside Global Payments (GPN) and PayPal (PYPL) as a very interesting payment-related company.
In fact, Global Payments is an open recommendation in our flagship newsletter, Stansberry's Investment Advisory. Subscribers can access our report and buy-up-to advice on the company, as well as our full portfolio of recommendations.
If we decide to recommend PayPal and/or Fiserv, subscribers will be the first to know. If you're not yet an Investment Advisory subscriber, you can become one by clicking here.
Best regards,
Whitney
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