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Why Shares of Shift4 Payments Are Falling Today

By Bram Berkowitz - May 6, 2021 at 3:42PM

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The company recently reported earnings for the first quarter of the year, which missed expectations.

What happened

Shares of the payment processor Shift4 Payments (FOUR -6.09%) had dropped more than 16% in the final hour of trading after the company recently reported earnings results for the first quarter of this year.

So what

Shift4 Payments, which provides small businesses with point-of-sale services through contactless devices and QR code scanners, reported a net loss of $51 million in the quarter, or a loss of $0.62 per share. That's down from a loss of $5.1 million in the first quarter of 2020. Total revenue in the quarter surpassed $239 million, up from just shy of $200 million in the first quarter of 2020.

The loss of $0.62 per share missed analysts' estimates by $0.43 per share, while revenue beat expectations set by analysts. 

Person holding head and watching line with arrow move down

Image source: Getty Images.

"During Q1, we experienced a risk loss due to a multi-location specialty retailer that abruptly closed as a result of business failure," CEO Jared Isaacman said in a letter to shareholders. "This business was an unfortunate casualty of the pandemic and the only notable risk charge in my 21-year history with the company."

Now what 

Despite the recent dip, I still see strong potential in Shift4, as this is a reopening play and the company serves some of the hardest-hit businesses in the pandemic such as restaurants and hotels.

Management at Shift4 also raised the company's full-year guidance for 2021 and now projects end-to-end payment volume between $44 billion and $46 billion, up from $36 to $38 billion earlier this year. This will translate into higher revenue and earnings.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool recommends Shift4 Payments, Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Shift4 Payments, Inc. Stock Quote
Shift4 Payments, Inc.
FOUR
$48.26 (-6.09%) $-3.13

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