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Why GreenSky Stock Tanked Today

By Evan Niu, CFA – Aug 11, 2020 at 2:19PM

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The payment tech specialist reported earnings and said it wasn't going to sell itself.

What happened

Shares of GreenSky (GSKY) have tanked today, down by 21% as of 1 p.m. EDT, after the company reported second-quarter earnings. The results topped expectations, but investors are disappointed that GreenSky has chosen not to sell itself.

So what

Revenue in the second quarter was $133 million, easily beating the consensus estimate of $100 million in sales. That translated into earnings per share of $0.06, also ahead of the $0.01 per share in profits that analysts were modeling for. The payment technology company and credit provider said transaction volumes fell 14% to $1.4 billion due to COVID-19 impacts, but volumes recovered throughout the quarter.

A loan agreement form on a clipboard with a calculator and pen on top

Image source: Getty Images.

"Following the COVID-19 impacted low point in April, transaction volumes had recovered by June to levels consistent with 2019," CEO David Zalik said in a statement. "The successful implementation this quarter of our [special purpose vehicle] serves to effectively supplement our funding capacity, as we plan to conduct periodic sales of loan participations to third parties or issue asset-backed securities."

Now what

A year ago, GreenSky said it would explore strategic alternatives in an effort to maximize shareholder value, which could have resulted in a sale of the company.

The company's board of directors has now concluded the review process and determined that the best route forward is to remain an independent company and "drive future value creation by executing on a growth plan that leverages a renewed focus on the Company's home improvement vertical, the cross marketing of complementary products to its consumer program borrowers, enhanced merchant productivity, scalability of operations, termination of the programmatic sale of charged-off receivables and funding diversification to support its continued profitable growth."

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

GreenSky, Inc. Stock Quote
GreenSky, Inc.
GSKY

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